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NEW BACKGROUND CHECK POLICIES SQUEEZING EMPLOYERS
Late last year, the Royal Canadian Mounted Police (“RCMP”) issued a directive to agencies that facilitate national criminal background checks. The directive outlines significant changes to the process governing the dissemination of criminal record information, and the process by which such agencies may conduct name-based criminal record verifications. In this FTR Now, we discuss these changes and the impact they have on employers seeking criminal reference checks relating to prospective employees.
BACKGROUND ON THE ISSUE
Until recently, employers in Canada could engage a background check agency or the Canadian Police Information Centre (“CPIC”), a national database administered by the RCMP containing a range of information useful to law enforcement, to provide criminal record checks on prospective employees. CPIC is maintained primarily for law enforcement purposes, and is both populated and queried by “CPIC agencies” (local police forces and other government agencies) that are authorized to access the database in accordance with its policies.
Employers engaging in background checks would be notified whether the prospective employee had a criminal record (including records about hybrid and indictable offences). If so, the employer was provided with the details of the criminal record. This allowed employers to assess the seriousness of the criminal record and to decide whether or not to hire the individual.
THE DIRECTIVE AND INTERIM POLICY
In December of 2009, the RCMP issued an interim policy entitled “Dissemination of Criminal Record Information” and a new FAQ explaining aspects of the interim policy. These communications address a number of compliance-related matters, two of which are having a particular impact on employers: (1) the matter of commercial service provider involvement in the conducting of vulnerable sector checks, and (2) the question of the information that may be provided in response to searches based only on name and date of birth.
(1) VULNERABLE SECTOR CHECKS MUST BE PROVIDED DIRECTLY
With respect to vulnerable sector checks, the directive specifies that these checks (and checks involving records protected by the Youth Criminal Justice Act) must not be provided through commercial services providers. The FAQ explains the process that police forces must follow in releasing results:
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The results can only be first released to the applicant by the police. If a record exists, it must be confirmed by the submission of fingerprints. If the record is confirmed or there is no record and the applicant chooses to divulge the results to the organization, the police agency may only release the information to the organization with the prior written consent by that individual.
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The RCMP has also specified that vulnerable sector checks can only be performed for positions inside Canada.
(2) INFORMATION PROVIDED TO EMPLOYERS: CLEAR OR “NOT CLEAR”?
Under the interim policy, employers will now only receive a statement that indicates whether a prospective employee’s criminal record check is either “clear” or “not clear”—but it will give no details on why the individual’s criminal record check was “not clear.”
However, a “not clear” result does not always indicate that the prospective employee has a criminal record. Because CPIC only uses name and date of birth in its searches, a result of “not clear” will be reported to the employer to avoid disclosing private information about the wrong individual, where two individuals share the same name and date of birth. In those cases, determining the existence of a criminal record and its details (if there is one) in respect of an employee requires the prospective employee to verify his or her identity by physically going to a local police station and getting fingerprinted. The prospective employee must also provide the police with written consent to allow the results to be sent directly to the employer.
The local police station will use the fingerprints to perform the more detailed criminal record check—a process that takes an average of 120 days, but sometimes much longer. This delay is problematic for many employers because criminal record checks are often only performed once an employee has been given a conditional offer of employment.
Given this change in policy, there is currently no expeditious process available to employers for verifying a criminal record.
IMPACT ON EMPLOYERS
The interim policy significantly impacts the services available to employers in Canada. In particular, the 120-day time frame for a verified check raises operational concerns for employers who must decide whether the organization can bear the risk of hiring a good but unverified applicant (whether on a full-time or interim, conditional basis)—or whether they can afford not to, and risk losing the applicant to a competitor.
In addition, employers in some jurisdictions, including Ontario, are prohibited from discriminating against employees or prospective employees on the basis of a “record of offences” under applicable human rights legislation. Employers may therefore have to determine whether the duty to accommodate arises in respect of a person, and if so, how fulfilling that duty may constrain the company’s ability to fill a position with another candidate. This will be difficult to determine without the full information provided by the verified check.
Employer reliance on “local indices checks” (sometimes also referred to as “police checks”) is likely to increase, though conducting multiple local searches of non-standard databases may take time and raise questions about coverage since these checks are comprised of a check of police files and occurrence reports within a locale, and not necessarily an entire province. There are also human rights compliance risks associated with local indices checks given the scope of information they can reveal, which can include information on provincial offences convictions, charges and miscellaneous “occurrences.”
Please contact David Ross at 416.864.7438, Dan Michaluk at 416.864.7253 or your regular Hicks Morley lawyer to discuss the impact these changes may have on your organization’s hiring and employment procedures.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion.This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photo-copied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP.©
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SCHOOL BOARD UPDATE
ONTARIO’S 2010 EARLY LEARNING PROGRAM: BRACING FOR THE FALLOUT
When was the last time your Board was involved in the legal “ins and outs” of a hotly contested certification drive before the Ontario Labour Relations Board? Ontario’s newly announced Early Learning Program could well provide you with an opportunity in the coming year. In this School Board Update, we discuss the ramifications and new challenges that face school boards throughout the province in light of this announcement.
BACKGROUND
Late last year, the Ministry of Education announced the first phase of Ontario’s plan for a province-wide “Early Learning Program”, which involves the implementation of full-day early learning for four- and five-year-olds. Phase One is intended to provide early learning for up to 35,000 four- and five-year-olds – 15 percent of the Junior and Senior Kindergarten population – during the 2010-2011 school year. The Ministry’s ultimate goal is to provide access to full-day early learning in all schools by the 2015-2016 school year.
Because the Early Learning Program is a school-based initiative, school boards will have a lead role in achieving the province’s vision for early learning, and will be required to consult with their school communities and other partners.
THE EARLY LEARNING PROGRAM
The Early Learning Program is based on two components:
(1) A core component that will be offered each school day during the hours of the instructional program (for example, from 9:00 am to 3:30 pm). In each classroom, a team of one teacher and one early childhood educator (“ECE”) registered with the College of Early Childhood Educators will work side by side to deliver the program.
(2) An extended day component that will be available before and after school (for example, from 7:00 to 9:00 am and 3:30 to 6:00 pm). This component will be led by ECEs and funded through parent fees set on a cost-recovery basis, with subsidies available for families who need help with the cost.
The Ministry has also established a class size standard for the Early Learning Program of an average of 26 students on a board-wide basis, which provides for a child-adult ratio of 13:1.
As a first step, school boards were required to prepare preliminary plans involving the selection of the schools that would offer full-day learning for the 2010-11 school year. These plans will be reviewed by the Ministry of Education and Ministry of Children and Youth Services by January 15, 2010.
CHALLENGES
In implementing Phase One, boards will need to respond to a number of financial, administrative and logistical challenges. Some of the most significant challenges involve the following human resources and labour relations issues:
Representation rights concerning the ECEs. In light of the absence of any legislative direction as to appropriate bargaining units for ECEs, there may be intense competition among existing (and possibly new) unions and teacher federations for representation rights. Boards will therefore need to familiarize themselves with the process for (and their rights during) applications for certification under the Labour Relations Act, 1995 (“LRA”). In addition, in light of the positions that some trade unions have already taken, it will also be necessary to review carefully the recognition provisions of existing collective agreements to determine if the new positions already fall within an existing bargaining unit (e.g. professional) and to understand the possible advantages and pitfalls associated with the voluntary recognition process.
Pay equity considerations. In light of the number of new employees arriving at school boards and the funding model for ECE wages introduced by the Ministry (which has already raised pay equity concerns), any negotiations that follow the determination of representation rights could create significant challenges for school boards.
Operational issues relating to the extended day. The Ministry’s direction concerning the extended day component will require boards to reconsider their existing arrangements for a number of employee groups, ranging from principals to caretakers and administrative staff. As boards work to implement new schedules and establish new responsibilities, they will have to review their contractual and collective agreement obligations, as well as the hours of work requirements of the Employment Standards Act, 2000.
Instructional issues. The Ministry has indicated that it expects teachers and ECEs to work side by side in delivering the classroom component. However, the teachers’ federations have already made clear statements concerning the scope of their members’ authority in the classroom. Each board’s demarcation of the responsibilities of each employee may therefore require a review of the Education Act, arbitral jurisprudence concerning teachers’ duties and an understanding of the process for jurisdictional disputes under the LRA. In addition, the Ministry’s class size standard for the Early Learning Program may in some cases conflict with collective agreement obligations.
The arrival of the ECEs, a large and distinct complement of new employees. As noted above, participating ECEs must be registered with the College of Early Childhood Educators and will be subject to regulation by that body in the same way that other professionals (e.g. teachers, social workers, psychologists, physiotherapists, etc.,) are governed by their Colleges. Boards will therefore need to familiarize themselves with the requirements for membership in the College, as well as the professional standards imposed on ECEs by the Early Childhood Educators Act.
In addition to these employment-related issues, boards may need to consider the impact of the Human Rights Code and the Education Act on pupils’ access to the limited number of schools offering the Early Learning Program during its early phases, and related issues concerning access to special education.
Hicks Morley’s School Board Practice Group has established a team of lawyers who are actively considering and reviewing these issues as they arise. If you would like to discuss how any of these issues may affect your board, please contact John-Paul Alexandrowicz (416.864.7292), David Brady (416.864.7310) or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion.This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photo-copied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP.©
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EXTENDING ACCESS TO INFORMATION OBLIGATIONS TO ONTARIO HOSPITALS: WHAT WOULD IT MEAN?
In late October of last year, the Ontario Hospital Association asked the provincial government to extend coverage of the Freedom of Information and Protection of Privacy Act (“FIPPA”) to hospitals as a means of promoting transparency and public accountability. This bulletin outlines the basic features of Ontario’s access to information regime and raises questions about how it may eventually apply to hospitals.
WHAT IS FIPPA ABOUT?
In 1988, the Ontario Government and approximately 200 other public institutions became subject to FIPPA, which is designed to promote access to information and protection of individual privacy. Municipalities, school boards and other local government institutions became subject to their own access and privacy legislation (“MFIPPA”), in 1991.
FIPPA and MFIPPA did not initially provide for universal coverage. A number of public institutions who receive government funding, including hospitals and universities, were not subject to either Act. Over the past 20 years, a number of institutions have been added to or deleted from coverage under one or the other of the Acts.
FIPPA has two parts – a part that promotes the protection of privacy and an access to information part. The access to information part, which will likely be the focus on any hospital sector amendment, has the following key features:
- a presumptive obligation to provide the public with access to all records in a hospital’s custody or control that are not specifically excluded from coverage;
- various procedural obligations dealing with how to receive and respond to access requests;
- a right to refuse access to records and information subject to a number of specific discretionary exemptions;
- a requirement to refuse access to records and information subject to mandatory exemptions;
- oversight by the Information and Privacy Commissioner/Ontario, who hears appeals of access decisions and has a power to order the disclosure of records.
This kind of regime features a much broader right of access than that brought in by the Personal Health Information Protection Act in 2004, which only gives individuals a right of access to their own personal health information. FIPPA grants a right of access to all recorded information in an institution’s custody or control that is not specifically excluded. Most employment-related records, for example, are excluded from the right of public access.
Whether an additional exclusion is necessary and warranted to ensure that hospitals and their patients have a sufficient “zone of privacy” within which to receive, deliver and improve the delivery of health care is likely to be a key question for policy-makers who address hospital sector coverage.
HOSPITALS AND FIPPA
The means by which hospitals might be made subject to FIPPA’s access to information regime is highly uncertain. For one, the drafters of any amendments to FIPPA will need to examine the interplay between a newly imposed access-to-information regime and the pre-existing rights, obligations and privileges arising from both the Personal Health Information Protection Act and the Quality of Care Information Protection Act. There are also other unique features of hospital administration – practice plans in teaching hospitals, for example – that may raise unique issues in applying FIPPA’s pre-existing provisions. These questions and others mean that the incorporation of hospitals into FIPPA might be associated with significant amendments. Though not contemplated by the OHA recommendation, it is also possible that hospitals be made subject to their own access to information legislation. It is too early to tell.
HICKS MORLEY’S ACCESS TO INFORMATION PRACTICE
Hicks Morley has advised and represented Ontario public sector institutions on matters related to freedom of information since FIPPA first came into force in the late 1980s. We have now built a leading provincial access to information practice based on this long-term public sector experience. Our current practice involves representing institutions in access appeals, advising on access requests and assisting with proactive matters such as records management procedure and policy. Given this experience with Ontario freedom of information law, and our equally long history in supporting hospital administrators, we believe we are well suited to help hospitals meet the challenges associated with coming under the purview of FIPPA.
We will follow and provide regular updates on hospital sector access to information developments. We have also prepared an information practices for hospitals looking for early input on access to information law and practice. If you would like a copy of the package or have any questions about FIPPA, please do not hesitate to contact Scott Williams (416.864.7325), Dan Michaluk (416.864.7253), Paul Broad (519.931.5604) or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion.This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photo-copied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP.
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MUNICIPALITIES EXPOSED TO CONSTRUCTION COLLECTIVE AGREEMENTS
In a recent decision, the Ontario Labour Relations Board (“OLRB”) held that key non-construction employer provisions of the Ontario Labour Relations Act, 1995 (the “Act”) were unconstitutional. In this FTR Now, we discuss how the decision could have an impact on the ability of municipalities to tender construction work.
BACKGROUND
The construction industry labour relations regime provides for a series of provincial collective agreements in the industrial, commercial and institutional sector (which includes construction work on municipal buildings) for each construction trade. These provincial collective agreements preclude the contracting out of any construction work to contractors who are not bound by the provincial collective agreement. One of the effects of this regime was that public sector employers such as municipalities and school boards who became certified by construction trade unions were unable to tender construction projects to non-union contractors.
The Ontario legislature recognized this concern when it introduced provisions in 1998 and 2000 which required the OLRB to terminate the bargaining rights of a construction trade union if the employer could establish that it was a “non-construction employer”, most recently defined in the Act as “an employer who does no work in the construction industry for which the employer expects compensation from an unrelated person”. Several municipalities have brought non-construction employer applications over the years.
IMPACT OF THE OLRB DECISION
In Independent Electricity Market Operator v. Canadian Union of Skilled Workers, the OLRB found key non-construction employer provisions of the Act inoperative on the basis that they are contrary to the freedom of association rights guaranteed by the Canadian Charter of Rights and Freedoms, and consequently declined to issue non-construction employer declarations thereunder.
As a result of the OLRB’s decision, municipalities presently in collective bargaining relationships with construction unions will no longer be able to obtain a declaration terminating the bargaining rights of a construction union and relieving them from obligations under a provincial collective agreement.
Accordingly, we might expect an increase in certification activity from construction trade unions vis-a-vis municipalities. A construction union can bring an application for certification at any time that a municipality employs construction trades, even if it only does so for a day. This means that municipalities should monitor their correspondence carefully, particularly over the holiday season, to ensure that they are able to respond to an application for certification within the mandatory two-day time frame. If no response is filed, the OLRB will certify the union without hearing from the municipality, which would preclude the municipality from challenging the union’s majority support (usually established by union membership cards rather than a vote) and affect its ability to rely on the remaining non-construction employer provisions. Once the union is certified, a municipality will no longer be able to apply for the termination of bargaining rights under the non-construction employer provisions.
If you would like to discuss how this decision may impact your workplace, contact John-Paul Alexandrowicz at 416.864.7292 or your regular Hicks Morley lawyer.
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ONTARIO INTRODUCES DRAFT PENSION REFORM LEGISLATION
INTRODUCTION
Following on the heels of the Report of the Ontario Expert Commission on Pensions (“OECP”), the Ontario Government released draft pension reform legislation on December 9, 2009. Bill 236, Pension Benefits Amendment Act, 2009 (“Bill 236”) marks the beginning of what the Government is calling a multi-stage pension reform process to modernize Ontario’s pension system.
The draft legislation covers an array of issues, virtually all of which were identified by the OECP as areas requiring reform. The second stage of the modernization process is slated to be introduced in 2010, and is anticipated to include changes applicable to the funding and investment of pension plans.
Bill 236 addresses corporate reorganizations and sale of business transactions through the elimination of partial wind ups, new asset transfer rules, and simplified surplus distribution rules on full plan wind ups.
Bill 236 also provides for enhanced member benefits in a number of respects, strengthens supervisory oversight, and expands member disclosure requirements.
This FTR Now reviews the highlights of Bill 236.
CORPORATE REORGANIZATIONS AND SALES OF BUSINESS: NEW RULES FOR WIND UPS AND ASSET TRANSFERS
ELIMINATING PARTIAL WIND UPS IN ONTARIO
Partial plan wind ups have been the source of significant litigation over the past two decades, yet the Financial Services Tribunal (“FST”) and court decisions have only added to the uncertainty for employers undergoing a reorganization or downsizing. Currently, it is very difficult to predict the circumstances in which a partial wind up will be ordered. In that sense, the elimination of partial wind ups is a positive change for employers.
FUTURE PARTIAL WIND UPS
Future partial plan wind ups will be eliminated under Bill 236. If passed, Bill 236 will provide that no partial wind up can be declared by the employer, or the administrator in the case of a multi-employer pension plan or ordered by the Superintendent, if the effective date of the partial wind up would fall on or after the date on which the new partial wind up provision of the amended Pension Benefits Act (“PBA”) comes into force, currently planned to be January 1, 2012. The current PBA partial wind up triggers will cease to exist.
In particular, as proposed, future downsizings that result from corporate restructurings or discontinuing business at a particular location will no longer trigger a partial wind up. Similarly, a corporate transaction in which the employer sells assets relating to a part of its business will not result in a partial plan wind up, even if the purchaser fails to establish a successor pension plan for transferring employees.
EXISTING PARTIAL WIND UPS
A separate set of proposed transition rules will apply to partial wind ups that are in existence or under consideration at the time the amended PBA provisions on wind up come into force.
The key consideration will be the cut off “effective” date for any new partial wind ups. There are no doubt numerous situations currently being assessed by the Superintendent and by employers and administrators that may trigger a partial wind up under the current PBA. The transition rules deal with this reality by establishing a complete prohibition on partial wind ups that have an effective date that is on or after the date the new legislation comes into effect, currently planned to be January 1, 2012.
Likewise, the Bill 236 transition rules expressly allow for a partial plan wind up to occur with an effective date that is before the date the new legislation comes into effect. Therefore, partial plan wind ups that have recently been declared or ordered will not be cancelled. For situations presently under consideration, or in respect of which the effective date of the partial wind up is not yet known, the transition rules specifically allow that the effective date can be determined after the coming into force of the new legislation.
Partial wind ups that are currently in progress, or that are declared or ordered with an effective date that is before the date the amended PBA comes into force, will be governed by transition rules which closely resemble the existing status quo provisions on partial wind up.
The main difference between the two is that, under the transition rules, the administrator will not be required to purchase annuities to satisfy the pension benefit entitlements of members affected by the partial wind up who have chosen to leave their pension benefits in the plan. This changes the current policy of the Financial Services Commission of Ontario (“FSCO”), which requires all pension benefits remaining in the wound up portion of the pension plan to be annuitized. The new rule will be a welcome change for administrators and employers.
Vesting and grow-in rights will continue to apply to members affected by partial wind ups. As well, the existing regime that applies on a partial wind up relating to the distribution and sharing of any surplus attributable to the wound up portion of the plan will remain in effect.
NEW PRE-CONDITIONS FOR FULL WIND UPS
Bill 236 introduces a new wind up concept that may well attract some of the same interpretive difficulties that have plagued the old partial wind up provisions since their inception in the late 1980’s.
Specifically, with the elimination of the partial wind ups relating to future events and transactions, Bill 236 introduces a new concept applicable solely to full wind ups. The trigger for a full wind up will be circumstances in which “all or substantially all” of the employer’s business is discontinued or sold or in which “all or substantially all” of the members of the pension plan cease to be employed as a result of a reorganization of the employer’s business. The phrase “substantially all” as distinct from “all” suggests that something less than a complete shutdown or the termination of all plan members will be sufficient to warrant a full plan wind up. The term “substantially all” is not defined in the Bill.
If any one of the full wind up triggers is met, and a wind up is consequently declared or ordered, the plan will be wound up in its entirety and the assets of the plan distributed in accordance with the amended PBA. A key consideration will be the rights and entitlements of remaining employees in respect of their plan membership in circumstances where a corporate reorganization results in a full plan wind up because of the cessation of employment of “substantially all” (but not “all”) of the members of the pension plan.
A related concern will be whether, in accordance with the interpretation of the FST and the Divisional Court in the Hydro One case, there might also be an order for a full wind up of the plan if “substantially all” of the members of one of the subgroups covered by the pension plan cease their employment under a reorganization.
SURPLUS SHARING ON FULL WIND UP
In a positive development for employers, the proposed amendments will simplify the process for an employer to obtain a refund of surplus on full wind up of a pension plan. Provided the employer establishes the existence of the surplus, provision has been made for the payment of all benefits and the employer and plan otherwise comply with the PBA requirements related to the payment of surplus, Bill 236 will permit the Superintendent to consent to the payment of surplus to an employer on the basis of a written agreement with members, former members, retired members and other persons entitled to payments on the date of the wind up without evidence that the pension plan provides for payment of the surplus to the employer on wind up.
In this case, an employer will no longer need to establish clear surplus ownership as a condition of obtaining a refund of surplus. This change will eliminate what was often a lengthy and expensive process of establishing surplus ownership and will curtail the need to bring court actions to correct any ambiguity in surplus ownership language.
As noted above, the proposed new surplus sharing regime will not apply to surplus distributions that are required under a partial plan wind up. The existing two-fold requirement of establishing employer ownership of surplus and the requisite consent of members and former members would continue to apply to a distribution of surplus on partial wind up of a pension plan.
ASSET TRANSFERS
DEFINED BENEFIT ASSET TRANSFERS ON SALE OF BUSINESS TRANSACTIONS
The transfer of pension assets in sales of business is generally beneficial to affected plan members since it allows their benefits to be kept “whole” by permitting future salary increases to apply to benefits earned in the vendor’s pension plan. Otherwise, affected plan members’ benefits remain “frozen” in their former employer’s pension plan with benefits determined based on earnings up to the date of sale or divestment, generally without the benefit of including future earnings increases with the successor employer.
Following the Ontario Court of Appeal decision in Aegon Canada Inc. and Transamerica Life Canada v. ING Canada Inc (“Transamerica”), FSCO adopted a policy that imposes restrictive limits on the ability of plan sponsors to transfer assets of pension plans, effectively prohibiting the transfer of affected members’ defined benefits in the vendor’s pension plan to the purchaser’s defined benefit plan. FSCO has taken the position that the Transamerica decision puts in question the ability to transfer assets between pension plan trusts – something which had previously been broadly accepted and routinely permitted. Since the Transamerica decision, FSCO has even imposed strict conditions in respect of applications for mergers of pension plans operated by the same employer. The imposition of these conditions and circumstances have essentially made asset transfers between defined benefit pension plans impossible in most cases. As a result, plan members have been left with past service benefits in the original plan and new benefits in the successor plan, a circumstance that can diminish their aggregate annual pension income significantly.
If passed, Bill 236 will amend the PBA to facilitate the transfer of assets between defined benefit pension plans by removing many of the current impediments to group asset transfers on sales of business.
The key changes to the PBA and FSCO policy proposed by Bill 236 which clarify and simplify defined benefit asset transfers areas follows:
STATUTORY CRITERIA FOR SUPERINTENDENT CONSENT TO AN ASSET TRANSFER ON A SALE OF BUSINESS OR DIVESTMENT
Bill 236 sets out the following five criteria that must be satisfied for the Superintendent of Financial Services (the “Superintendent”) to consent to the asset transfer:
1. the original employer and the successor employer must have entered into an agreement to transfer the assets and the Superintendent must be given notice of the agreement;
2. if the agreement requires the consent of the transferred members, their consent must have been given for the transfer and the Superintendent must be given notice of their consent;
3. the administrators of the two pension plans must have agreed on the valuation of the assets to be transferred and the Superintendent must be given notice of their agreement;
4. if the benefits to be provided under the successor plan for transferred members are not the same as those provided under the original plan, the commuted value of the benefits cannot be less than the commuted value of the benefits under the original plan; and
5. if the original plan has a surplus as of the effective date of transfer, a proportion of that surplus must be included in the assets transferred. The calculation of the proportion of surplus must be in accordance with regulations that have yet to be released.
TRANSFERS OF IDENTICAL BENEFITS V. BENEFITS OF EQUIVALENT VALUE
FSCO has taken the position that, under the PBA, plan members whose benefits are being transferred into another defined benefit plan on a sale of business or divestment must be offered past service benefits identical in every respect to those provided in the original plan. Identical benefits are difficult for the successor plan to administer since a plan amendment is required and the benefits are different from those offered under the main plan formula. Bill 236 proposes to rectify this troublesome position by amending the PBA to clarify that the successor plan is not required to provide the same pension benefits for the transferred members that were provided under the original pension plan, as long as the commuted value of the benefits provided under the successor plan is not less than the commuted value provided for them under the original plan.
PRIOR MEMBER CONSENT TO ASSET TRANSFER ON SALE OF BUSINESS OR DIVESTMENT
Bill 236 proposes to amend the PBA to provide the vendor and purchaser, as administrators of their plans, with the ability to agree to require the prior consent of affected plan members to transfer their pension benefits from the original plan to the successor plan. Adding the requirement for prior member consent in an asset transfer agreement between the parties would be desirable for the vendor, in particular, since Bill 236 also provides that if an asset transfer is made with the consent of a member, the administrator of the original plan (in most transactions, being the vendor or an affiliate of the vendor) is discharged on transferring the assets in accordance with the PBA.
PROPORTIONATE SHARE OF SURPLUS ON TRANSFER OF ASSETS
On an asset transfer, the PBA currently does not clearly require that a proportionate share of assets to liabilities (which would include a proportionate share of surplus) must be transferred from the original pension plan to the successor plan. Current FSCO Policy Statement No. 2 provides that where a proportionate share of surplus is not transferred on an asset transfer, the transferred members retain a right to share in the surplus in the original plan should that plan wind up in future. However, in a 2008 decision of the Ontario Court of Appeal in Burke v. Governor and Co. of Adventurers of England Trading into Hudson’s Bay (“Burke”), the Court found that the issue relating to whether a transfer of surplus is required on an asset transfer could be resolved by determining whether the transferred employees had any entitlement to the surplus based on the original plan documents at the time of the sale. Bill 236 overrides the Burke decision by amending the PBA to clearly require that the value of assets transferred include a prescribed portion of surplus.
WINDOW TO TRANSFER PENSION ASSETS IN RESPECT OF PAST SALES AND DIVESTMENTS
To assist members and employers negatively affected by past restructurings and divestments, Bill 236 opens a window to July 1, 2013 within which pension plans affected by such transactions may enter into agreements that would allow current individual plan members to elect to consolidate their pension benefits in the successor pension plan by way of an asset transfer. The asset transfer can be effected without the consent of the Superintendent provided the transfer agreement is filed with the Superintendent and certain statutory and prescribed requirements are met.
SUMMARY OF NEW ASSET TRANSFER RULES
Other than the requirement to transfer a proportionate share of surplus, overall, the proposed amendments to the PBA dealing with asset transfers between plans are good news for plan sponsors. Notably, Bill 236 proposes to override the impediments created by the Transamerica decision and resulting FSCO regulatory policy by setting out relatively clear criteria required to be satisfied in order to obtain the Superintendent’s consent. Parties to sale of business transactions and divestments must negotiate the terms of the transfer subject to the condition that the commuted value of the benefits transferred into the successor plan shall be no less than the commuted value of those benefits in the original plan. These provisions of Bill 236 are also good news for plan members who may be involved in corporate transactions because they facilitate the consolidation of affected members’ pension benefits in their new employer’s plan and also propose to provide a temporary remedy (available until July 1, 2013) for those members whose pension benefits were negatively affected by past corporate divestments and restructurings.
The new asset transfer rules will impose additional communication challenges for the administrator of the original plan if the parties agree that prior member consent to the transfer will be required. The administrator would have to provide affected members with adequate information on which to base their decision to consent to the transfer. Such communications would presumably include personal statements and detailed explanations of the implications of the transfer.
Bill 236 still leaves some important requirements for asset transfers to be determined in the regulations, such as funding conditions that must be satisfied, especially in circumstances where either pension plan has going concern or solvency deficiencies as of the effective date of the transfer.
ENHANCED INDIVIDUAL MEMBER RIGHTS
Bill 236 contains a number of proposed amendments aimed at enhancing the entitlements of members of individual pension plans. The most surprising of these enhancements is the very significant expansion of grow-in rights. Other proposed enhancements include immediate vesting and phased retirement provisions.
IMMEDIATE VESTING
Following the lead of the Province of Quebec and the announced intention of the Federal Government, Bill 236, if passed, would provide for immediate vesting of pension entitlements. This proposal is also consistent with the recommendation made by the OECP.
SMALL BENEFIT COMMUTATIONS
Given that the immediate vesting provision will apply to all pension plan members, even short-service members will have pension entitlements. In order to ease the burden on pension plan administrators associated with managing a greater number of small pension amounts, Bill 236 proposes an increase to the threshold applicable to small benefit commutations. Currently, a pension plan may commute the pension benefits of a former member if the annual pension payable at normal retirement date is 2 percent (or less) of the Year’s Maximum Pensionable Earnings in the year of termination of membership (“YMPE”). Bill 236 proposes to allow pension plans to be amended to commute pension entitlements if the annual pension payable at normal retirement date is up to 4 percent of the YMPE or if the commuted value of the pension is less than 20 percent of the YMPE.
The small benefit rule will be extended to apply to survivor pensions. In this case, the limit will be based on the YMPE in the year of the member’s death.
GROW-IN BENEFITS
Grow-in benefits provide an enhanced pension benefit to members whose age and continuous service totals 55 or more points. Ontario and Nova Scotia are the only two Canadian jurisdictions to mandate grow-in benefits. In general terms, the grow-in provisions entitle defined benefit pension plan members who have at least 55 age and service points to the value of early retirement subsidies and bridge benefits based on the credited service they have earned to the date of their termination of plan membership. Currently, grow-in benefits only apply in the event of a full or partial wind up of a pension plan. For many employees, the value of grow-in benefits may exceed the value of notice and severance pay entitlements, particularly for those participating in pension plans with generous early retirement subsidies and bridge benefits.
Consistent with the OECP recommendations on grow-in benefits, Bill 236 proposes to extend grow-in benefits to all members of single employer sponsored plans whose employment is involuntarily terminated commencing on January 1, 2012. Notably, the Bill 236 requirement that pension plans provide grow-in benefits for all involuntary terminations of employment does not extend to members of jointly-sponsored pension plans or multi-employer pension plans. In the case of those plans, an election can be made to opt out of providing grow-in benefits.
Under Bill 236, grow-in benefits are proposed to continue to apply in the case of full pension plan wind ups and partial wind ups during the transition period described above. The “activating event” that triggers grow-in benefits would include either the full wind up of a pension plan or the employer’s termination of a member’s employment on or after January 1, 2012. Resignations will not trigger grow-in benefits under Bill 236. However, the pension law implications of a resignation versus a not for cause termination are significant and may affect how employers manage near cause terminations. Terminations of employment resulting from willful misconduct, disobedience or willful neglect of duty by the member that is not trivial and has not been condoned by the employer are excluded from the application of grow-in benefits. This standard is similar to the “just cause” standard applied under the Employment Standards Act, 2000 in respect of terminations which do not require the provision of severance pay or advance notice or pay in lieu thereof. Bill 236 allows for other terminations of employment to be excluded by regulation. To the extent that employment terminations such as those arising from frustration of contract or from a refusal to accept reasonable alternative employment are not ultimately excluded, terminated employees could be disentitled from receiving statutory notice or severance pay but yet be entitled to grow-in benefits under their pension plans.
If these provisions of Bill 236 become law, the issue of entitlement to grow-in benefits will need to be addressed in all terminations of employment for both unionized and non-unionized employees. There is a real potential for civil courts, arbitrators, the Ministry of Labour, and the Superintendent each to develop a different view of the “just cause” threshold or to have overlapping jurisdiction to address this issue in the case of a particular termination of employment. Presently, it is not permissible to contract out of entitlements under the PBA and an issue for consideration is whether the workplace parties themselves will be able to independently arrive at a binding settlement that represents a compromise on the value of grow-in benefits that may be payable from a pension plan.
As mentioned above, the extension of grow-in benefits to most involuntary termination circumstances is proposed to have application commencing on January 1, 2012. This timing provides Ontario-based employers with an opportunity to amend (or in the case of negotiated plans, to negotiate amendments to) the early retirement and bridge benefit provisions of their pension plans. Since they are “ancillary benefits”, it remains permissible under the PBA to reduce or eliminate them for those members who have not met all qualifications to receive the benefits. However, other employment law considerations may affect employers’ ability to make such changes unilaterally..
PHASED RETIREMENT
Bill 236 would also amend the PBA to permit phased retirement pensions for Ontario members of defined benefit pension plans. This follows through on a commitment made in the 2009 Ontario Budget.
Until recently, federal income tax regulations had the effect of preventing credit for additional service under a pension plan once an employee commenced receipt of a pension from that plan. Amendments to the Income Tax Act (Canada) (“ITA”) changed this rule so that an employee who qualifies could receive a partial pension while continuing to accrue credited service under the pension plan. Notwithstanding these changes, complementary amendments were required under the PBA to extend phased retirement to Ontario plan members.
Bill 236 does not make phased retirement a mandatory plan provision. Rather, it proposes to permit plans to be amended to offer phased retirement. It is likely that an employer that decides to amend its plan to permit phased retirement would be required to make it available to classes of employees, and would not be permitted to make phased retirement available to select individuals.
Moreover, Bill 236 proposes to extend phased retirement only to Ontario members who satisfy all of the following conditions:
- the member must be at least 60 years of age or at least 55 years of age and entitled to an unreduced pension;
- the member has not yet reached the plan’s normal retirement date; and
- the member and the member’s employer have entered into a written agreement providing for a reduction in the member’s regular hours of work and containing terms respecting phased retirement payments.
Bill 236 also proposes that phased retirement payments cannot exceed 60 percent of the pension payments to which an eligible member would be entitled as a retired member. Certain other rules governing phased retirement pensions may be prescribed by future regulations that have yet to be released.
These changes would bring Ontario into line with other Canadian jurisdictions that have already introduced phased retirement. It is not clear whether Bill 236 is also intended to permit phased retirement for defined contribution plan members.
SUPERVISORY OVERSIGHT AND IMPROVED PLAN ADMINISTRATION
Bill 236 proposes to tweak several provisions of the PBA in an effort to simplify plan administration and reduce administration costs. It also provides the Superintendent with expanded oversight powers.
IMPROVED PLAN ADMINISTRATION
The ability to transfer, on a non-locked in basis, certain cash payments from the pension fund to an RRSP or RRIF will be specified in the PBA if Bill 236 becomes law. The types of payments affected include small benefits, excess contributions (as a result of the application of the 50 percent rule), refunds of required contributions with interest, and pre-retirement death benefits. Many plan administrators already permit a recipient to direct payment to his or her personal registered savings vehicle, but with this change, all plans will be required to offer it as an option.
Bill 236 also proposes to relax the timing for an application for the refund of employer contributions made in error, or for reimbursements to the employer of amounts that should have been paid out of the fund. Applications to the Superintendent will no longer have to be made in the same fiscal year as the over-contribution or payment. This deadline was cumbersome since such errors are often not discovered until after the fiscal year in which they occurred. Bill 236 proposes that employers can apply for refunds within 24 months after the date the contribution or payment were made, or, if later, six months after the date the administrator becomes aware of the mistake.
ENHANCED POWERS FOR SUPERINTENDENT
Bill 236 gives the Superintendent the power, in prescribed circumstances, to order a plan administrator to have an actuarial valuation or other report prepared, even if no valuation is due under the normal timeframes set out in the PBA. This was recommended by the OECP.
The Bill requires that the Superintendent must have reasonable and probable grounds to believe that there is a substantial risk to benefit security, or that there has been a “significant change in the circumstances of the pension plan”. The Superintendent might attempt to use this power when there is reason to believe that the plan assets have been seriously eroded due. for example, to poor investment performance and a series of benefit improvements, and the employer is continuing a contribution holiday based on the results of the last triennial valuation. A new valuation would then trigger a new contribution requirement and perhaps prevent further decline in the plan’s funded status and may be designed to measure the financial health of a pension plan in the case of a sale or other event, which now does not trigger a partial wind up.
Among other things, the order may specify the assumptions or methods to be used in the report and require the administrator or employer to pay the cost of the report.
The order will take immediate effect and will not be subject to the usual FST hearing appeal procedures. Rather, the order must be appealed to the FST within 15 days after it is received. A stay of the order is not automatic and must be requested from the FST (or from the court, if judicial review of the order of the FST is subsequently sought).
As recommended by the OECP, Bill 236 gives the Superintendent the power to approve an agreement by the parties to a Companies’ Creditors Arrangement Act (“CCAA”) compromise or arrangement or Bankruptcy and Insolvency Act (“BIA”) proposal that results in less than the required amounts being paid to the pension fund.
As a result of recent amendments to the CCAA and BIA, a court cannot approve an arrangement or proposal if the arrangement or proposal does not provide for the payment to the pension fund of normal cost contributions and deducted but unremitted member contributions. These provisions give those payments a “super” priority ahead of other creditors of the employer. However, under the BIA and CCAA amendments, the court can approve an arrangement which results in the insolvent company remitting something less than these amounts if the pension regulator has approved the agreement.
Bill 236 proposes to grant the Superintendent the power to approve such an agreement. The agreement must satisfy certain conditions before the Superintendent can approve it. These conditions will be prescribed in regulations which have yet to be released.
Once the Superintendent decides to approve or not approve the agreement, the decision is final, and the PBA does not provide for any appeal from that decision. Although under administrative law rules there may continue to be grounds to seek a judicial review of the Superintendent’s decision by a court, the circumstances under which this will be possible will be very limited. The finality of the Superintendent’s decision will facilitate an arrangement by minimizing the opportunities for a plan beneficiary who is opposed to the arrangement to prevent or delay the implementation of a compromise by disputing the Superintendent’s decision to approve it.
TRANSPARENCY AND ACCESS TO INFORMATION FOR PLAN MEMBERS AND PENSIONERS
Bill 236 proposes a number of new measures aimed at increasing transparency and access to information for plan members and pensioners. Increased transparency and access to information were the subject of some of the recommendations made in the OECP report. While not fully adopting the OECP’s recommendations, the proposed amended legislation will enact the following key measures.
DISTINGUISH BETWEEN “RETIRED MEMBERS” AND “FORMER MEMBERS”
Bill 236 defines “retired members” as those former members in receipt of a pension or entitled to receive an immediate pension. The amended PBA will distinguish retired members from “former members”, who will be defined as members who have terminated membership in a pension plan but who have neither begun to receive nor are entitled to receive an immediate pension. Currently, the PBA’s definition of “former member” encompasses both retired and other terminated members without distinguishing between the two.
Retired and former members will be entitled to receive specified information about their pension plan that will be set out in future regulations. As well, the proposed legislation will allow retired members to participate in a pension committee or board of trustees acting as the administrator of a pension plan.
The proposed changes adopt recommendations of the OECP report aimed at encouraging the participation of retired members in pension plan governance.
FACILITATE ESTABLISHING PENSION ADVISORY COMMITTEES
The PBA currently allows members and former members (as that term is currently defined) to establish a pension advisory committee (“PAC”) by majority vote between them. The purpose of a PAC is to monitor a pension plan’s administration, to make recommendations to a plan administrator and to increase all members’ understanding of their plan. Practically, few plans have PACs, and the OECP found that those PACs that do exist are often ineffective because they lack access to relevant plan information.
The amended legislation will make it easier for members to establish PACs. A trade union will be able to consent to the establishment of a PAC on behalf of active members whom it represents. The amendments will entitle each class of employee represented in a pension plan to appoint at least one representative to the PAC. Retired members will be entitled to appoint at least two members. Former members (as that term will be newly defined) will also be able to participate in PACs, but such participation will not be mandatory. As well, proposed rules will require plan administrators to facilitate both the creation and ongoing activities of a PAC by providing the PAC with any relevant information under its control and certain other assistance that will be set out in future regulations.
The proposed amendments partly adopt the OECP’s recommendation that every plan, subject to limited exceptions, be required to establish a PAC of at least five members and comprising both active and retired members. While the amendments do not go so far as to require each plan to have a PAC, they do give substantial participation power to unions and retired members should a PAC be established.
PROVIDE ADVANCE NOTICE OF PLAN AMENDMENTS
Bill 236 proposes to require pension plan administrators to provide members, retired members, former members, and trade unions with notice of all plan amendments before they are registered with the regulator, subject to exceptions that will be set out in future regulations. Currently, administrators need only provide affected members with notice of “adverse” amendments, which are defined as amendments that reduce future pension accruals or otherwise adversely affect rights of members or others entitled to payment from the plan. Administrators may currently provide notice of other, non-adverse amendments in the annual statement provided to members. It is unclear what kinds of amendment the future regulations will exempt from the proposed requirement to give advance notice, and, more particularly, whether these exemptions will at least include compliance or “housekeeping” amendments.
PROVIDE ENHANCED PLAN INFORMATION AND ACCESS TO DOCUMENTS
Bill 236 contains a new provision allowing plan administrators to provide all members with notices, statements, and other records electronically, subject to exceptions that will be outlined in future regulations. Members will have to consent to receive such notices electronically. The provision of electronic documents will be governed by Ontario’s Electronic Commerce Act, 2000.
As well, the proposed amended legislation will modify existing provisions allowing the inspection of pension plan documents and records. The PBA currently requires plan administrators and the Superintendent to make prescribed pension plan documentation available for inspection by plan members, trade unions, participating employers, and certain other parties on request. The proposed amended legislation will expand these parties’ access to pension plan information by requiring plan administrators and the Superintendent to provide copies of specified documents, electronically or by mail, on written request. Fees charged by plan administrators for this service will be subject to prescribed maximums.
Finally, Bill 236 introduces a novel exception to the right of members’ and other parties’ to inspect plan documents. A new provision will bar inspection of a plan record if the Superintendent takes the position that disclosure of the record could reasonably be expected to prejudice the economic interest or competitiveness of an employer.
Bill 236 partially adopts the OECP’s recommendation that members have electronic access to plan documentation since many of them are unable to attend at the premises of an employer or the Superintendent. On the other hand, the OECP also recommended that plan administrators translate or summarize all documentation into “plain” English or the dominant language of the workplace. Bill 236 does not go this far.
REQUIRE RETENTION OF RECORDS
Bill 236 requires plan administrators to retain prescribed pension records for prescribed periods of time. Future regulations will set out the parameters of this requirement.
CONCLUSION AND NEXT STEPS FOR EMPLOYERS
Bill 236 passed first reading in the Ontario Legislature on December 9, 2009. It is not known when the Bill will become law and it is possible that revisions may be made to the draft legislation. Therefore, the amended PBA may ultimately differ from Bill 236. Nevertheless, the Bill gives employers a very good indication of the general thrust of the new legislation, which will generally come into effect upon a day to be named by proclamation of the Lieutenant Governor.
Certain specific provisions will come into effect on specific dates set out in Bill 236. These include grow-in rights (January 1, 2012), and the closing of transfer window for asset transfers relating to past divestitures (January 1, 2013).
It is important that employers immediately begin to assess the implications of any ongoing or contemplated corporate initiative or transaction affecting pension plan members, in particular, in order to be in a position to respond to the changes. Employers will also want to track the passage of the Bill and to review and understand the regulations when they are released. Our Pension & Benefits Group will keep you apprised of these developments over the months ahead.
If you have any questions about this FTR Now, or about how Bill 236 may affect your business and your pension plan, please contact any member of the Pension & Benefits Group.
Elizabeth Brown Chair, Pension & Benefits Practice Group
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion.This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photo-copied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP.
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SCHOOL BOARDS EXPOSED TO CONSTRUCTION COLLECTIVE AGREEMENTS
In a recent decision, the Ontario Labour Relations Board (“OLRB”) held that key non-construction employer provisions of the Ontario Labour Relations Act, 1995 (the “Act”) were unconstitutional. In this FTR Now, we discuss how the decision could have an impact on school boards' ability to tender construction work.
BACKGROUND
The construction industry labour relations regime provides for a series of provincial collective agreements in the industrial, commercial and institutional sector (which includes construction work on school board buildings) for each construction trade. These provincial collective agreements preclude the contracting out of any construction work to contractors who are not bound by the provincial collective agreement. One of the effects of this regime was that public sector employers such as municipalities and school boards who became certified by construction trade unions were unable to tender construction projects to non-union contractors.
The Ontario legislature recognized this concern when it introduced provisions in 1998 and 2000 which required the OLRB to terminate the bargaining rights of a construction trade union if the employer could establish that it was a “non-construction employer”, most recently defined in the Act as “an employer who does no work in the construction industry for which the employer expects compensation from an unrelated person”. At least two school boards have been successful in obtaining non-construction employer declarations from the OLRB.
IMPACT OF THE OLRB DECISION
In Independent Electricity Market Operator v. Canadian Union of Skilled Workers, the OLRB found key non-construction employer provisions of the Act inoperative on the basis that they are contrary to the freedom of association rights guaranteed by the Canadian Charter of Rights and Freedoms, and consequently declined to issue non-construction employer declarations thereunder.
As a result of the OLRB’s decision, school boards presently in collective bargaining relationships with construction unions will no longer be able to obtain a declaration terminating the bargaining rights of a construction union and relieving them from obligations under a provincial collective agreement.
Accordingly, we might expect an increase in certification activity from construction trade unions vis-a-vis school boards. A construction union can bring an application for certification at any time that a school board employs construction trades, even if it only does so for a day. This means that school boards should monitor their correspondence carefully, particularly over the holiday season, to ensure that they are able to respond to an application for certification within the mandatory two-day time frame. If no response is filed, the OLRB will certify the union without hearing from the board, which would preclude the board from challenging the union’s majority support (usually established by union membership cards rather than a vote) and affect the board’s ability to rely on the remaining non-construction employer provisions. Once the union is certified, a school board will no longer be able to apply for the termination of bargaining rights under the non-construction employer provisions.
If you would like to discuss how this decision may impact your workplace, contact John-Paul Alexandrowicz at 416.864.7292, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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ONTARIO RELEASES NEW PENSION REFORM LEGISLATION
Following swiftly on the heels of the Report of the Expert Commission on Pensions, the Ontario Government released draft pension reform legislation on December 9, 2009. The draft legislation marks the beginning of what the Government is calling a multi-stage pension reform process to modernize Ontario’s pension system.
The legislation covers an array of issues, virtually all of which were identified by the Expert Commission as areas requiring reform. The second stage of the modernization process is slated to be introduced in 2010.
This is the most significant reform of pension legislation in any jurisdiction in Canada since 1987. Hicks Morley’s Pension & Benefits Practice Group is assessing the legislation carefully and will provide a report that identifies the implications of this legislation for your business.
Here is a link to Bill 236 and a link to the Technical Backgrounder to the legislation released by the Ontario Government on December 9, 2009.
In the meantime, if you have any questions, please contact any member of the Hicks Morley Pension & Benefits Practice Group.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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ONTARIO GOVERNMENT PASSES WORKPLACE VIOLENCE LEGISLATION
On December 9, 2009, the Ontario Legislature passed Bill 168, the Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace), 2009. Bill 168 will come into effect on June 15, 2010. Bill 168, which requires employers to develop policies to address workplace violence and harassment and to assess the risk of violence in its workplace, was amended before being ordered for Third Reading. Amendments to the Bill included redefining “workplace violence” and empowering Health and Safety Inspectors to order that risk assessments and reassessments be in writing or be posted in the workplace. In this FTR Now, we discuss the new requirements that will apply to employers in Ontario as a result of this legislation.
DEFINING “WORKPLACE VIOLENCE”
Bill 168 amends the Occupational Health and Safety Act (the “Act”) to define “workplace violence” as:
(a) the exercise of physical force by a person against a worker, in a workplace, that causes or could cause physical injury to the worker,
(b) an attempt to exercise physical force against a worker, in a workplace, that could cause physical injury to the worker,
(c) a statement or behaviour that it is reasonable for a worker to interpret as a threat to exercise physical force against the worker, in a workplace, that could cause physical injury to the worker.
The definition of “workplace violence” was amended after Committee hearings to clarify that a threat of workplace violence could be either a statement or a behaviour that is interpreted by a worker as a threat to exercise physical force against the worker in the workplace. The overall focus of the section remains the same: there must be physical force, an attempt to exercise physical force or a statement or behaviour that could be interpreted as a threat to exercise physical force. There is no reference to psychological harm.
DEFINING WORKPLACE HARASSMENT
Bill 168 also requires that an employer have a policy posted in the workplace to address workplace harassment. The definition of “workplace harassment” is quite broad and includes conduct in the workplace that is known to be unwelcome by the worker.
“Workplace harassment” is defined as:
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…engaging in a course of vexatious comment or conduct against a worker in a workplace that is known or ought reasonably to be known to be unwelcome;
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Employers should note that existing harassment policies that focus on Human Rights Code-related harassment may not be broad enough to capture “workplace harassment” as defined by Bill 168.
PREPARING AND POSTING POLICIES
Bill 168 requires employers to prepare a written policy with respect to workplace violence and workplace harassment. The policies must be posted in a conspicuous place in the workplace. Different requirements apply to workplaces of five or fewer employees.
The policies must be reviewed as often as necessary and at least once a year. The legislation also requires employers to provide information and instruction to employees on its workplace violence policy and program.
ASSESSING THE RISKS OF VIOLENCE
Bill 168 requires an employer to assess the risks of workplace violence that may arise from the nature of the workplace, the type of work or the conditions of work.
The risks assessment must take into account common risks at other similar workplaces and risks specific to the employer’s workplace.
A copy of the risks assessment and its results must be provided to the joint health and safety committee or health and safety representative. If there is no committee or representative, employees must be advised how to obtain copies of the assessment and its results and it must be provided to workers on request. Health and Safety Inspectors may also order that it be posted in the workplace.
REASSESSING THE RISKS OF VIOLENCE
In addition to doing an initial assessment, Bill 168 requires an employer to reassess the risks of violence as often as necessary to protect workers. The legislation does not provide any guidance on how often the employer must perform a reassessment.
IMPLEMENTING A WORKPLACE VIOLENCE PREVENTION PROGRAM
An employer will be required to develop and maintain a program to implement the workplace violence policy. The program must include measures and procedures:
- to control the risks identified in the risks assessment or reassessment;
- to summon immediate assistance when workplace violence occurs or is likely to occur, including when a threat of workplace violence is made;
- for workers to report incidents or threats of workplace violence to the employer or supervisor;
- to investigate and deal with incidents, complaints or threats of workplace violence; and any further elements required by regulation.
ADDRESSING DOMESTIC VIOLENCE
Bill 168 requires an employer to take all reasonable precautions in the circumstances for the protection of the worker if a domestic violence situation would likely expose a worker to physical injury in the workplace and the employer becomes aware or ought to reasonably be aware of the situation.
DISCLOSING PERSONS WITH A HISTORY OF VIOLENCE
One of the more controversial aspects of the legislation is the requirement to provide information, including personal information, about a person with a history of violent behaviour if:
(a) the worker can be expected to encounter that person in the course of his or her work; and
(b) the risk of workplace violence is likely to expose the worker to physical injury.
The legislation limits the disclosure only to information that is reasonably necessary to protect workers from physical injury.
This aspect of the legislation requires employers to establish some sort of notification procedure for persons with a history of violence (including patients or clients) so that workers who may encounter the person are aware of the risk of potential physical injury. Some employers may find this type of profiling problematic. Employers must also be cognizant of their obligations under the Personal Health Information Protection Act and other privacy legislation, as Bill 168 does not specifically override an employer’s obligations under other legislation.
REFUSING WORK IF WORKPLACE VIOLENCE IS LIKELY TO ENDANGER
The legislation permits a worker to refuse to work or do particular work where he or she has reason to believe that workplace violence is likely to endanger himself or herself.
The Act currently prohibits certain workers such as police officers, firefighters, correctional officers and hospital employees from refusing work when the unsafe condition is inherent in the work or is a normal condition of employment. Bill 168 allows for a regulation to specify situations that define when an unsafe condition is inherent in the work or is a normal condition of employment.
REPORTING OBLIGATIONS
The legislation requires an employer to report and provide prescribed information on a workplace violence incident to the joint health and safety committee within four days of its occurrence.
The Act would still require the Ministry of Labour to be notified of a critical incident or a fatality in the workplace. Absent a critical injury or fatality, an Inspector may require an employer to notify the Ministry of Labour’s Director of Occupational Health and Safety of a violent incident.
WHAT EMPLOYERS NEED TO KNOW
Employers need to prepare for Bill 168 by having a workplace violence and workplace harassment policy. Employers also need to assess the risks of workplace violence. The risks assessment and its results should be in writing and shared with the joint health and safety committee or health and safety representative. Workers also need to be instructed on the policy and any program developed by the employer to address the risks of workplace violence.
For some employers, Bill 168 will require detailed procedures, protocols and training for risks such as working alone, dealing with potentially violent patients, customers or students, security while traveling, or lock downs.
If you need any assistance in developing policies and procedures to address your obligations under Bill 168, please contact Meghan E. Ferguson at 416.864.7350, Robert W. Little at 416.864.7332, Scott G. Thompson at 416.864.7283, John J. Bruce at 416.864.7285, Kathryn Meehan at 519.883.3120 or your regular Hicks Morley lawyer.
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IMPENDING CHANGES TO GOVERNANCE UNDER EDUCATION ACT
On November 17, 2009, Bill 177, the Student Achievement and School Board Governance Act, 2009, was reported as amended by the Standing Committee and was ordered for Third Reading. Debate on a Bill is limited at Third Reading and no amendments to its text may be moved at this stage. Therefore, it is likely that Bill 177 will pass into law in its present form. This FTR Now gives an overview of the Bill and its implications.
With Bill 177, the government has attempted to clarify and supplement the roles and responsibilities of school boards, trustees, chairs and directors of education.
Many of the main provisions found in the Bill at First Reading remain in place, including the following:
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- promote student achievement and well-being;
- develop a multi-year plan aimed at achieving identified goals;
- ensure effective stewardship of resources;
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- School boards may be required to adopt a Code of Conduct for trustees;
- Duties of the board chair are expressly set out;
- Duties of directors of education are increased.
A number of significant changes have been made to the first draft of Bill 177, several in response to concerns expressed by the Ontario Public School Boards’ Association and the Ontario Catholic School Trustees’ Association. Notable changes include the following:
- a board's responsibility for student achievement has been limited to the general promotion of “student achievement and well-being”, with no further reference to particular outcomes to be specified by regulation;
- the original provision authorizing the Minister to use regulations to modify “the roles, responsibilities, powers and duties of boards, directors of education and board members, including chairs of boards" has been deleted;
- clarification that while a board may be required by the Minister to adopt a Code of Conduct for trustees dealing with certain issues, the precise content of the Code will be determined locally rather than by regulation;
- the provision authorizing the reduction of a trustee’s honorarium as a possible sanction for a violation of a board’s Code of Conduct has been deleted;
- trustees are now required to “uphold” the implementation of a board resolution once passed, rather than “support” such implementation as the Bill originally required;
- trustees are now required to “entrust” day-to-day management of the board’s affairs to board staff “through the director”, rather than “refrain from interfering” in such administration, as the Bill originally stated.
Finally, the following provisions have been added to Bill 177:
- enhanced procedural fairness has been afforded to a trustee should it be determined by a board that he or she has breached the board’s Code of Conduct;
- trustees are expressly required to fulfill their responsibilities in a manner that “assists the board” in fulfilling its duties under the Education Act.
To view Bill 177 as it presently stands click here.
If you would like to discuss the implications of Bill 177, please contact Michael A. Hines (Toronto) at 416.864.7248 or Bushra Rehman (Toronto) at 416.864.7531, who have been following Bill 177 through the legislative process, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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ALCOHOL AND THE OFFICE PARTY
With the holiday season approaching, employers are once again planning their holiday festivities. Whether the festivity is large or small, it remains as important as ever that employers take proactive steps to ensure the health and safety of their employees who attend office parties or other celebrations.
Over the years, a number of court decisions have signalled that employers face a risk of liability should an employee drink too much at an office function and then be permitted to drive. There is a risk that the employee will injure him- or herself, or that the employee may injure an innocent third party. In addition, if inappropriate behaviour occurs at the function there is a risk that subsequent problems may result for the employer and the workplace generally. Thus, prudent employers will want to take a number of steps to provide all attendees with a safe environment as well as safe transportation alternatives for returning home. Prudent employers will also take a number of steps to minimize the liability associated with holiday events where alcohol is served.
To assist you in your holiday planning, we have provided the following range of options for employers to consider in order to avoid situations where an employee becomes intoxicated and either behaves inappropriately or leaves a holiday event in an unsafe condition.
- Consider whether to have an alcohol-free event. While the caselaw does not go so far as to say that an employer must never serve alcohol to its employees, this option is the lowest risk alternative for employers.
- If you provide alcohol, do not provide an open and unsupervised bar. If you choose to provide an open bar, do not keep it open for the entire evening.
- Monitor employees’ alcohol consumption. Take positive steps to keep track of how much employees are drinking. Establish a system ahead of time to assist in this endeavour.
- Consider utilizing a ticket system to limit the number of drinks an employee or other guest may have during the party.
- Hire a third party to tend the bar and serve the drinks to employees and guests. Instruct the third party to monitor consumption. Identify a contact person for the third party, should a problem arise.
- Prior to the event, inform employees that they are not to drink and drive either to or from the event. This could be done in a bulletin announcing the details of the party, and should be repeated at the beginning and end of the event.
- Set up alternative transportation for employees. It is important that this be arranged prior to the party, and that alternatives are adequately communicated to employees. This step is crucial if your party will occur in a location that is difficult to get to without a car.
- Provide taxi chits to employees. Do not wait until after employees have been drinking to offer a cab – you may have difficulty convincing an intoxicated guest that he or she is unable to drive.
- Consider establishing car pools with designated drivers who would not drink, and who would undertake to take the other members of the car pool home after the event.
- Assist in arranging for hotel rooms for employees who live far from the event, perhaps by arranging a reduced rate with a nearby hotel.
Even if employers take positive steps to control and limit alcohol consumption, there may be some employees who drink too much and do become intoxicated. In that event, employers may have an obligation to take positive steps to ensure that the employee does not drive.
For example:
- Take away the employee’s car keys or vehicle. Consider a system whereby employees leave their car keys with an attendant at the start of the evening to avoid the situation of having to remove keys from an intoxicated guest.
- Arrange to have a sober co-worker drive the employee home. Alternatively, call the employee’s spouse. Don’t just offer to do so.
- Insist that the employee take a cab, and pay for it.
- If all else fails, and the employee insists on driving in an intoxicated state, call for police assistance.
By planning ahead of time, employers can help avoid many of the problems associated with excess alcohol consumption, and can ensure that an enjoyable and safe time is had by all their guests.
We wish you and your employees an enjoyable and safe holiday season.
For further information, please contact your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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LISA MILLS NAMED A RISING STAR
On November 12, 2009, the Lexpert® Rising Stars Under 40 were introduced at a gala dinner and awards presentation at the Arcadian Court in Toronto.
Lisa Mills, a partner in the firm’s Pension and Benefits practice group, was voted in as a winner by the Rising Stars Advisory Committee. The selection criteria were:
- deals, cases and/or files;
- community or professional involvement, or pro bono work;
- contribution to firm profitability;
- adaptability to change;
- education, awards and affiliations; and
- team player qualities.
Here is how Lexpert® described Lisa at last night’s event:
Lisa Mills is a partner at Hicks Morley Hamilton Stewart Storie LLP and a leading Canadian pension lawyer. Her significant mandates include representing Hydro One Inc. in Hydro One Inc. v. Superintendent of Financial Services; the Ontario government in Kranjcec v. Ontario; and the University of Western Ontario, for which she created the first customized registered retirement income fund.
Mills joined the firm in 1998 and was instrumental in growing the pension practice group from two to 11 lawyers, making it one of the top such practices in Canada. She develops clients through speaking engagements, writing for the firm and industry publications, and participating in industry organizations.
Mills is a past chair of the Ottawa chapter of the Canadian Pension and Benefits Institute (CPBI), served as a member of the CPBI Ontario Regional Counsel, and was chair of the chapter’s golf tournament in aid of the Schizophrenia Society for two years. As the parent of a child with Down Syndrome, she is a member of the Down Syndrome Association’s National Capital Region and the Canadian Down Syndrome Society, for which she served as a volunteer at its 2008 conference.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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FIREFIGHTERS’ PRESUMPTIVE LEGISLATION NOW APPLIES TO VOLUNTEERS
Effective November 4, 2009, the Ontario Government has expanded its presumptive occupational disease coverage legislation for firefighters to volunteer and part-time firefighters and to fire inspectors. This coverage will apply on the same terms and for the same diseases, in accordance with the Workplace Safety and Insurance Act (“WSIA”).
This change will have very significant cost impacts on some municipalities. In this FTR Now, we discuss the ramifications of this development.
BACKGROUND
In 2007, the Government of Ontario passed Bill 221, which introduced a presumption that various diseases suffered by firefighters were occupational diseases. Compensation under the WSIA would therefore be payable unless the employer could rebut the presumption and show that there was a non-occupational reason that the employee had contracted the disease. This presumption has now been extended to volunteer and part-time firefighters, and to fire inspectors on the same terms and for the same diseases.
The original rules for full-time firefighters were set out in section 15.1 of the WSIA, and in Regulation 253/07. The new rules for volunteer and part time firefighters and fire inspectors came into effect on November 4th, 2009, with the filing of Regulation 423/09 (the “New Regulation”), which simply amends Regulation 257 to expand its scope. In short, these rules are now in force, and municipalities can expect to be hearing from the WSIB with respect to individual claims in the near future.
THE NEW COVERAGE AND WHAT IT MEANS
Under the Fire Protection and Prevention Act (“FPPA”), “volunteers” are defined as firefighters who work on a voluntary basis, and receive either no compensation or nominal compensation. The New Regulation defines part-time firefighters as “a worker who is a firefighter and is not a volunteer firefighter or full-time firefighter”. Therefore, this Regulation applies to anyone who is, or was, employed as a firefighter by a municipality in any capacity.
Heart conditions that arise within 24 hours of attending at a fire scene, or actively participating in a training exercise that involves a simulated fire emergency are considered occupational diseases. In addition, there are eight cancers that are covered by the Regulation as occupational diseases. They are:
a) Primary-site brain cancer;
b) Primary-site colorectal cancer;
c) Primary-site bladder cancer;
d) Primary acute myeloid leukemia, primary chronic lymphocytic leukemia or primary acute lymphocytic leukemia;
e) Primary-site ureter cancer;
f) Primary-site kidney cancer;
g) Primary non-Hodgkin’s lymphoma; and
h) Primary-site esophageal cancer.
The new presumption does not just apply to occupational diseases diagnosed from November 4th, 2009 forward. The presumption applies to any one of the listed diseases (including the heart conditions) where a diagnosis was made on or after January 1, 1960.
The effect of the new rules is that the Workplace Safety and Insurance Board (“WSIB”) will now presume that any part-time or volunteer firefighter who was diagnosed with any of these cancers, or a heart condition, got that condition as a result of their work as a firefighter. Unless the municipality can rebut the presumption, they could be liable for significant claims costs.
Schedule 1 employers do not pay the costs of these claims directly. Instead, the costs of occupational disease claims are charged to the Municipal Rate group, and spread out amongst all of the Employers in the group. Occupational diseases are generally not included as costs on NEER statements either, although that does vary depending on the disease. Schedule 2 employers, on the other hand, do pay the costs of these claims directly. Our experience has been that, typically, these claims will have a total cost for Schedule 2 employers of in excess of $500,000.00 each.
CAN YOU CHALLENGE THE PRESUMPTION?
The presumption is rebuttable, and can therefore be challenged. However, challenging the presumption is difficult, and requires significant amounts of evidence in order to be effective or successful. From our experience, the type of evidence you will need to mount a challenge includes the following:
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1. Records of the worker’s primary employment. This may be important, as the primary employment may also be a source of exposure to cancer-causing agents.
2. Records of the work they have done for the municipality. How often have they responded to fires, and what type have they responded to? How long have they been a volunteer with the municipality?
3. The employee’s smoking history. The employee may have a significant smoking history that may be a key cause of their cancer.
4. Records of the employee’s training.
5. Medical literature on the causes of each type of cancer.
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Should you wish to challenge the presumption in a particular case, we would suggest carefully reviewing the case with your Hicks Morley lawyer, or a member of our WSIB practice group, prior to initiating the challenge.
WHAT BENEFITS WILL BE PAID?
If a claim is allowed, the WSIB will pay the appropriate benefits, depending on the age of the claim. For example, a worker with a diagnosis date of 2002 would be entitled to health care benefits, as well as a Non-Economic Loss (“NEL”) assessment, and Loss of Earnings benefits.
There are two issues that will arise. First, for firefighters who are employed at the time they are diagnosed with one of these conditions, there will be a question as to what earnings basis will be used to calculate their benefits. WSIB Policy 18-02-05 states that employees who are employed in concurrent employment will have all of their earnings taken into account. In other words, the municipality will be liable to pay benefits on everything that the employee earns. It should be noted that this calculation can change, depending on the nature of the employee’s work.
The second issue flows from the benefits that may be payable to retirees. WSIB Policy 18-02-02 sets out additional guidelines for the calculation of Loss of Earnings (“LOE”) benefits for occupational disease claims. Under this Policy, the WSIB calculates the average earnings to be the greater of the annual earnings of a fully qualified worker at the time of diagnosis, or the worker’s annual earnings in the 12 months prior to the date of accident.
The WSIB has interpreted this Policy to pay benefits to retired firefighters, even when they do not have any earnings at the time they are diagnosed with the occupational disease. The Workplace Safety and Insurance Tribunal has adopted a different interpretation, and stated the retirees are not entitled to LOE benefits unless they are employed and actually have earnings at the time of diagnosis. This issue was dealt with in our April, 2009 FTR Now, “Municipalities and Occupational Disease”. Currently, the WSIB is engaged in a review of its practices on this issue, and the results of that review are expected soon.
It is unclear from the WSIB’s existing policies and practices how benefits will be adjudicated for retired volunteer firefighters. It is possible that the WSIB will decide to pay retired volunteer firefighters full LOE benefits, even though they were not employed at the time that their occupational disease was diagnosed. This is an issue we will continue to monitor.
CONCLUSION
Municipalities will be faced with potentially significantly increased costs as a result of the expansion of the firefighters presumptive legislation. However, it will be possible to manage these costs to a certain extent. Should you wish further information, please feel free to contact William M. LeMay (Toronto) at 416.864.7276, Elizabeth Kosmidis (Toronto) at 416.864.7246, David W. Brady (Toronto) at 416.864.7310, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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ESA AMENDMENTS NOW IN FORCE, OTHERS PROPOSED
In our FTR Now of April 24, 2009, “Amendments Made to Temporary Help Agencies”, we discussed important new amendments to the Employment Standards Act, 2000 (“ESA, 2000”) outlined in Bill 139, the Employment Standards Amendment Act (Temporary Help Agencies), 2008 (“Bill 139”).
Today, Bill 139 comes into force. As anticipated, the government of Ontario has now enacted a Regulation eliminating the exemption from termination and severance pay for elect to work employees. In addition, the government has proposed new legislation that if passed, would further amend the ESA, 2000 to restrict the circumstances in which the termination of assignment employees is a “mass termination” for the purposes of Part XV of the ESA, 2000.
In this FTR Now, we highlight these key legislative developments.
ELECT TO WORK EMPLOYEES ENTITLED TO TERMINATION AND SEVERANCE PAY – EXEMPTION FOR COMMUNITY CARE ACCESS CORPORATIONS – O.REG. 397/09
Previously, “elect to work” employees were exempt from the termination and severance pay provisions of the ESA, 2000. Regulation 397/09 removes the exemption of elect to work employees as of today, November 6, 2009. However, there is a temporary exception for elect to work employees who are employed to provide professional services, personal support services or homemaking services as defined in the Long-Term Care Act, 1994 for an employer who has a contract to provide those services with a community care access corporation. That exception will cease to apply on October 1, 2012.
TEMPORARY LAY-OFFS – O.REG. 398/09
As previously reported, effective today, the temporary lay-off provisions of the ESA, 2000 will apply to employees of temporary help agencies who are temporarily assigned to clients (“assignment employees”). Regulation 398/09, Terms and Conditions of Employment in Defined Industries – Temporary Help Agency Industry, stipulates that for the purposes of temporary lay-off provisions of the ESA, 2000, the relevant date for calculation is November 6, 2009. Only a period of 20 consecutive weeks or 52 consecutive weeks that begins after November 5, 2009 shall be taken into account. In the case of a lay-off that begins on or before November 5, 2009, only the part of the lay-off that occurs after November 5, 2009 shall be taken into account. Where a lay-off exceeds the temporary lay-off period, employees will be deemed terminated on November 6, 2009.
However, if a temporary help agency has to pay an assignment employment termination or severance pay, the assignment employee’s service prior to November 6, 2009 will be included for the purposes of calculating his or her notice and/or severance entitlement.
The full text of Bill 139 and the new regulations are available here:
http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=2132
http://www.e-laws.gov.on.ca/html/source/regs/english/2009/elaws_src_regs_r09397_e.htm
http://www.e-laws.gov.on.ca/html/source/regs/english/2009/elaws_src_regs_r09398_e.htm
MASS TERMINATION PROVISIONS – BILL 212
Presently, and also effective today, the mass termination provisions of the ESA, 2000 apply to assignment employees as a result of Bill 139. However, recently the government of Ontario introduced new legislation that if passed, would further amend the ESA, 2000 to restrict the circumstances in which the termination of assignment employees is a “mass termination” for the purposes of Part XV of the ESA, 2000.
Bill 212, the Good Government Act 2009, is good news for temporary help agencies, as it would require a temporary help agency to give notice of mass termination only if:
i) 50 or more assignment employees of the agency who were assigned to perform work for the same client of the agency at the same establishment of that client were terminated in the same four-week period, and
ii) the terminations resulted from the term of assignments ending or from the assignments being ended by the agency or by the client.
Interestingly, pursuant to the transitional provisions of Bill 212, if a temporary help agency fails to meet the notice requirements as set out in Bill 212, between November 6, 2009 and the day that Bill 212 comes into force, the temporary help agency has the obligations that the agency would have had if the failure had occurred on or after Bill 212 was in force. In other words, if passed, the Bill will have retroactive effect and will deem those temporary help agencies who failed to comply with the current ESA, 2000 mass termination provisions, to only be liable for the notice requirements where the circumstances set out in i) and ii) are met.
Bill 212 is presently at Second Reading, and is not yet law. The full text of Bill 212 is available here.
If you have any questions about the impact of Bill 139 or the associated regulations, please contact Kathryn L. Meehan (Waterloo) at 519.883.3120, Amanda J. Hunter (Toronto) at 416.864.7265, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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EFFECTIVE PANDEMIC PLANNING
Employers have a general obligation under health and safety law to take all reasonable precautions in the circumstances to protect their workers. What does this entail, however, in a pandemic situation, such as the one currently facing employers?
In our May 1, 2009 FTR Now – “Employer Bulletin: Influenza A(H1N1)” – we discussed some of the important rights and obligations of both employees and employers related to the spread of the H1N1 Influenza Flu Virus (“H1N1” or the “Virus”). In this FTR Now, we highlight issues to consider when developing or fine-tuning your own pandemic plan.
Following a discussion of how to create a plan that works for your organization, we have focused on how employers can manage medical information before, during and after a pandemic.
BACKGROUND
The Ontario Ministry of Health and Long-Term Care (“MOHLTC”) has warned us that this year it will be a “different kind of flu season”. As media reports continue to spotlight regional outbreaks, it is more important than ever for employers to have policies in place to deal with potential pandemic situations so that disease transmission can be both prevented and contained within the workplace.
BE PREPARED: DESIGN A PLAN THAT FITS YOUR WORKPLACE
Having a pandemic plan in place will increase the likelihood that disease outbreak will be better prevented and contained. Moreover, employees will expect that their employers have given thought to this issue in a proactive manner, so have a plan in place now.
In a unionized environment, consider involving the bargaining agent in the development of your plan. This consultative model may reduce the possibility of any challenges to the plan once it is implemented.
Consider establishing a committee to deal with the logistics of an outbreak or pandemic declaration. The committee could undertake a variety of activities:
- Liaise with supervisors and managers to monitor the prevalence of the disease in the workplace.
- Communicate information from health officials to appropriate individuals in the workplace.
- Keep all employees informed of the status of the pandemic and the steps that the employer is taking on an ongoing basis.
In addition, employers can take proactive steps to promote disease prevention by:
- Educating employees about the disease, including symptoms and risks.
- Informing employees of ways they can prevent the spread of disease, such as practicing good hand hygiene in the workplace, and covering up when sneezing and coughing.
- Regularly inspecting and replacing filters on air circulation systems, cleaning common areas, and, in particular, telephone sets, after each shift.
- Increasing cleaning activities when a pandemic has been declared.
- Providing masks and hand sanitizers when appropriate.
In order to reduce disease transmission in the workplace you may need to direct sick or symptomatic employees to remain off work. Accordingly, you should determine in advance how your organization will address employee absences:
- Examine existing policies, including sick leave plans, and the provisions of any applicable collective agreement, to determine whether employees will be paid.
- Determine whether employees may utilize any legislated leaves during their absence. For a more detailed discussion, please see the May 1, 2009 FTR Now: “Employer Bulletin: Influenza A(H1N1)”
Furthermore, you should consider reducing the impact of time away from work without pay by:
- Allowing employees to use vacation time to cover their absences.
- Allowing employees to make up the time at a later date and not interrupting their pay.
- Where possible, allowing employees to work from home.
Employers should take reasonable steps to ensure that employees who are absent from work due to sickness are not still contagious upon their return. This may be particularly challenging because a true medical clearance would require a lab test, which employees may not be able to secure in a timely manner and which some medical bodies have suggested would be an inappropriate use of medical system resources. The alternative is to conduct a symptom-based assessment where warranted, ideally through trained medical personnel. For employers regulated by private sector privacy legislation, there are special concerns that we have discussed below.
TELL EMPLOYEES ABOUT YOUR PLAN
An organized communications strategy is key to the success of your pandemic plan. Identify a point of contact for your employees so that they know where to go for information and to whom they should direct their questions. Communicate your plan in a clear and concise manner, ensuring employees understand the rationale for the measures you may adopt, and keep your employees up-to-date.
OPERATIONAL CONCERNS
Where possible, in advance of a pandemic being declared, determine whether your organization will be able to operate and how you will cover potential absences. Consider what you will have to do if you need to close your organization. You should consider reducing direct contact between employees by rescheduling meetings and training where possible, and using email, teleconferencing and other means.
TESTING AND IMMUNIZATION
Consider whether testing of employees or immunization is appropriate for your workplace, and determine how you will need to handle employees who refuse to be tested or immunized. Make sure that your strategy for this is communicated in advance.
BE PREPARED FOR POSSIBLE WORK REFUSALS
Employees have the right to refuse to work if they believe that their health and safety is at risk, so ensure your management staff is familiarized with the legislated work refusal process set out in the Occupational Health and Safety Act.
LEGAL CONSIDERATIONS
Be aware of your employees’ legal rights, particularly their privacy rights – dealing with employees will often require handling sensitive personal health information. Ensure that you abide by all applicable privacy legislation, as well as all other relevant statutes. If you have questions, seek legal advice.
Ultimately, what will constitute the best plan for your company will depend on your organization’s own risk assessment.
MANAGEMENT OF MEDICAL INFORMATION BEFORE, DURING AND AFTER A PANDEMIC
The proper care and treatment of your employees’ medical information is a challenge at the best of times. Pandemics and disease outbreaks only heighten the need for best practices. Without a clear medical information management plan in place, employers may be left scrambling to devise one on the spot. It is therefore prudent to consider putting policies into place which detail the kind of information it is reasonable for management to collect, use and disclose when a pandemic has been declared.
Highlighted below are key factors you should consider when developing your pandemic outbreak medical information management plan. Employers must consider the best way to balance legitimate health and safety concerns with the privacy interests of employees.
PRE-PANDEMIC PLANNING – EXPAND THE INFORMATION THAT YOU GIVE
A medical information management plan sets out the medical information an employer will collect from an employee and how that information will be used, disclosed and kept secure. During a pandemic, employers should take special steps to communicate with employees about the rationale for the plan.
Clear direction to your employees outlining why you are collecting certain medical information will help your employees understand why it is necessary and reasonable for you to collect, use and disclose their medical information in response to the situation. This kind of communication should also help them understand how you are balancing the privacy interests of individuals with the overall health and safety of the workforce. If employees understand the rationale for your decisions, they may be less likely to challenge the steps you take, helping to reduce the risk of costly and time-consuming litigation.
When educating your employees you will want to ensure employees understand such matters as: the symptoms of the disease; the risks of contracting the disease; how the disease is transmitted; and ways to reduce transmission in the workplace.
Communication and education should be key components of any pandemic response – be that in the workplace or within our communities.
COLLECTION, USE AND DISCLOSURE OF MEDICAL INFORMATION DURING A PANDEMIC DECLARATION
As part of their pandemic planning process, employers should determine what information they are entitled to ask employees for and how they can use and disclose this information. Employers must consider what information they need to protect the health and safety of their workforce, and how they can achieve this protection in as minimally intrusive a manner as possible.
In ordinary times, employers are advised against requiring an employee to disclose a specific diagnosis. However, there is no absolute rule against obtaining a diagnosis from an employee. Indeed, some decision-makers have recognized that a diagnosis may be necessary information for an employer to have in order to fulfill its health and safety obligations to the entire workforce.
Thus, during a pandemic, when employers have reason to believe that employees are in the workplace in a contagious state, they may arguably ask questions to assess this point. This is a medical assessment, and should ideally be conducted by qualified medical personnel who are apprised of the most recent information on the H1N1 Virus. The information collected should be recorded either in employees’ confidential medical file or in a special confidential record that is kept separate from the personnel file. This type of screening is arguably a necessary and appropriate part of pandemic management, but is not without risk. Those employers subject to private sector privacy legislation should beware that the federal, British Columbia and Alberta privacy commissioners have released publications that seem to preclude such action.
In some cases, an employer may seek confirmation of immunization, particularly when the place of employment is a healthcare setting. Similarly, in the context of some outbreaks, an employer may wish to know whether an employee has travelled to an area which is experiencing a high incidence of the disease in question. As can be seen, different kinds of information may well need to be collected, used and disclosed at various points throughout the course of the pandemic.
It is important to remember, however, that the necessity of the collection of this information does not mean that the employer can or should disclose this information in an unrestricted fashion. Rather, employers should use and disclose the health information on a “need to know” basis only. Employers must carefully examine what information needs to be used or disclosed in the circumstances to fulfill their obligations to all of their employees, as well as to those to whom the employer provides services.
IMPACT OF PRIVACY LEGISLATION
Employers must also remember that they may be subject to specific privacy legislation.
Employers who are federally regulated and employers with employees in Alberta and British Columbia are subject to private sector privacy legislation that governs the collection, use and disclosure of employee personal information. In late October, the Office of the Privacy Commissioner of Canada, the Office of the Information and Privacy Commissioner for British Columbia and the Office of the Information and Privacy Commissioner of Alberta published two documents on privacy and management of the H1N1 pandemic. These documents seem to preclude the type of H1N1 screening we have described above. Though they are not statements of law, they do raise special pandemic planning considerations for organizations who are subject to privacy legislation in respect of their employees.
AFTER A PANDEMIC
Ideally, the records generated in the course of managing a pandemic will fit within an established class of records and therefore be subject to an established records retention rule. If not, an employer should establish a retention rule for such records with a view to their value as potential evidence of due diligence.
A BALANCING ACT
Ultimately, the overriding consideration that employers will want to keep in mind is whether the information they require is necessary in the circumstances. Employers must balance their own rights and obligations to manage and protect the workplace with the individual privacy interests of employees. Being prepared for the situations that may arise will help employers make the right decisions at crucial times during a pandemic.
If you have any questions, or would like some assistance in drafting your own pandemic or medical management plan, please do not hesitate to contact Craig Rix (Toronto) at 416.864.7284, Michelle Alton (Toronto) at 416.864.7238, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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AODA UPDATE: FINAL PROPOSED EMPLOYMENT ACCESSIBILITY STANDARD RELEASED
Employers and human resources practitioners in Ontario need to know about the latest development under the Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”). The Ontario government just released the Final Proposed Employment Accessibility Standard (“Final Proposed Standard”), which, if adopted as law in its current form, will broadly impact the employment practices of nearly all employers in Ontario, whether small or large, public, private or not-for-profit, and covers all aspects of the employment life cycle from recruitment to termination.
We strongly encourage employers to review and understand these proposed changes in order to start planning for when the Final Proposed Standard becomes the law.
BACKGROUND
As you may be aware, the purpose of the AODA is to break down the barriers that prevent or limit persons with disabilities from participating in a variety of activities in Ontario – from employment, receipt of goods and services, transportation, the built environment and information and communication – through the enactment of accessibility standards that will be enforceable as law. The AODA complements the requirements under the Human Rights Code and other laws that protect disabled persons from discrimination or harassment, and is intended to have organizations take proactive measures to address accessibility issues.
THE “INITIAL” PROPOSED EMPLOYMENT ACCESSIBILITY STANDARD
On March 19, 2009, we published an FTR Now entitled, “Transforming Human Resources Practices Under the Proposed AODA Employment Accessibility Standard”. That FTR Now reviewed the then newly-released Initial Proposed Employment Accessibility Standard. Following a public review period, the Initial Standard was revised, and has now been submitted to the Minister of Community and Social Services for her review and approval. The Minister will review the Final Proposed Standard and ultimately develop a regulation under the AODA which will give the standard, or some version of it, the force of law (as is implied by this statement, the Minister has the power to further amend the Final Proposed Standard, so there may yet be changes before it becomes law).
CLASSES OF OBLIGATED ORGANIZATION RE-CONFIGURED
The Final Proposed Standard applies to public, private and not-for-profit organizations in Ontario that provide paid employment to at least 1 employee.
Private sector and designated public sector employers in Ontario have been separated into different classes based generally on the size of their workforce. Each class will have their own compliance timelines for each requirement ranging anywhere from 1 to 5 years from when the Standard becomes the law. The classes are as follows:
- Private sector organizations with 1-49 employees
- Private sector organizations with 50-200 employees
- Private sector organizations with 201 or more employees
- Designated public sector organizations with 1-49 employees
- Designated public sector organizations with 50 or more employees
- Ontario Public Service (OPS)
With the exception of small private sector organizations with less than 50 employees, all requirements of the Final Proposed Standard will apply to all employers. Small private sector organizations with less than 50 employees are exempt from several requirements, and generally have longer compliance timelines. In the text that follows, the phrase, “most classes of employers”, will generally mean all classes of employers except for the class of small private sector organizations with less than 50 employees.
ACCESSIBLE EMPLOYMENT POLICY STATEMENT AND SUPPORTING POLICIES REQUIRED
Under the Final Proposed Standard, all employers will be required to adopt or develop and maintain a policy statement which includes the following commitments:
- identify, remove and prevent barriers throughout the employment life cycle;
- develop inclusive employment systems and procedures;
- support persons with disabilities with accommodations during recruitment, assessment, selection and hiring stages;
- provide individualized accommodations to support employees with disabilities;
- respect the privacy of information related to the accommodation of potential and existing employees;
- provide alternate formats and other related communication supports and services upon request; and
- provide disability awareness training to employees.
Most classes of employers will also be required to adopt or develop, document and maintain policies that support each of the commitments set out in the policy statement.
EMPLOYERS TO PROVIDE DISABILITY AWARENESS TRAINING TO EMPLOYEES
All employers will be required to provide disability awareness training to employees related to the creation of an inclusive workplace.
Most classes of employers will be responsible for providing additional training to employees “based on areas of responsibility” in the following areas:
- accessible employment policies and procedures;
- what accommodations can be made;
- how to support disability disclosure;
- how to identify accommodations;
- how to develop an individual accommodation plan; and
- skills and strategies for supporting employees with disabilities.
The Final Proposed Standard does not specify exactly which employees are to receive this additional training, and employers may have some flexibility in determining who within their organization is to receive this additional training.
NEW REQUIREMENTS IN RECRUITMENT, ASSESSMENT, SELECTION AND HIRING
Recruitment practices will change as employers will be required to meet the specific requirements described below.
(A) PROVIDING ACCOMMODATION TO POTENTIAL EMPLOYEES
Employers will be required to inform all applicants that accommodation will be provided to applicants with disabilities to enable their participation in the recruitment, assessment, selection and hiring stages. In addition, most classes of employers will be required to adopt or develop, document and maintain a procedure to ensure that applicants with disabilities are provided with accommodation to enable their participation in the recruitment, assessment, selection and hiring stages.
(B) JOB INFORMATION
Whether for internal or external recruitment, all employers will be required to provide information upon request on the essential duties of the job for which the recruitment is being undertaken. Most classes of employers will also have to document the essential duties of the job.
(C) RECRUITMENT
All employers will be required to “demonstrate how their external recruitment process enables candidates with disabilities to receive information about job vacancies”. It is unclear what “demonstrate” entails and to whom it must be demonstrated. Employers will also be required when posting employment opportunities to set out in the posting that individual accommodation will be provided to applicants who are selected for assessment.
(D) ASSESSMENT AND SELECTION
When using assessment and selection materials and processes, employers will be required to inform the applicants who have been selected for further consideration that the materials and processes are available upon request in accessible formats, communication supports and services. Employers must also ensure that such materials and processes assess the applicants based on the essential duties of the job.
(E) HIRING
When making written job offers, employers must inform the person receiving the offer about the employer’s individual accommodation procedures.
RETAINING DISABLED EMPLOYEES
Employers will also have specific requirements in relation to retaining existing employees, which is the Final Proposed Standard’s way of describing the ongoing employment relationship.
(A) INFORMING EMPLOYEES ABOUT ACCOMMODATION PLAN AND PROCESS
All employers will be required to inform employees about the accommodation procedure, from the request for accommodation to participation in the accommodation process.
Most classes of employers will also be required to adopt or develop, document and maintain a procedure for the establishment of individual accommodation plans for employees, to explain the following:
- how an accommodation may be requested;
- how individual employees requesting accommodation can participate in the development of an accommodation plan;
- how the privacy of accommodation plan information will be managed and protected;
- how individual accommodation plans will be reviewed and modified;
- how and when input will be considered from workplace, medical and/or other experts;
- the role of the bargaining agent; and
- how disputes related to individual accommodation plans may be resolved.
Where an employee has requested accommodation, most classes of employers will be required to provide individual accommodation plans to the employee and shall:
- assess and accommodate an employee on an individual basis;
- consider input from the employee requesting the accommodation and, as appropriate, from workplace, medical and/or other experts;
- detail the accommodations to be provided;
- detail timing for the provision of accommodations;
- include individualized emergency evacuation procedures if required; and
- describe the decision-making process used to develop or refine the plan.
(B) TRAINING FOR NEW JOB DUTIES
Most classes of employers will be required to provide, as soon as practicable, new employees with information on policies and procedures that support disabled employees and on how to request an accommodation.
All employers, however, must provide employees who have accommodation needs or plans with training on the essential job duties of the new job consistent with the employee’s accommodation needs or plan.
(C) PERFORMANCE MANAGEMENT AND CAREER DEVELOPMENT AND ADVANCEMENT
All employers that conduct performance management or provide career development and advancement information must do so in a way that is consistent with individual accommodation needs or plans.
(D) RETURN TO WORK
Most classes of employers will need to adopt or develop, document and maintain a procedure to facilitate the return to work of employees absent due to a disability unrelated to a WSIB injury or illness.
(E) REDEPLOYMENT
All employers that provide redeployment for employees will need to ensure the procedure applies to employees with disabilities, takes into account their individual accommodation needs or plans, and that employers consult with the employee and his or her representative if requested.
(F) SEPARATION AND TERMINATION
When providing information on separation and termination, such as a notice of layoff, employers “shall have the means” to deliver accessible formats and other related communication supports and services upon request for such communication.
(G) EMERGENCY AND SAFETY INFORMATION
All employers will be required to explain emergency and safety information including information on alarm systems and emergency evacuation procedures to employees who have identified themselves as having a disability. This obligation is proposed to be in force within 1 year of the Final Proposed Standard coming into force.
Most classes of employers will also have to adopt, develop, document and maintain a procedure to communicate and disseminate such information to employees with disabilities as soon as practicable.
ACCESSIBLE INFORMATION AND COMMUNICATIONS
In addition to the requirements set out above, all employers “shall have the means” to provide a variety of employment-related information in accessible formats and other related communication supports and services, including:
- essential duties of vacant jobs;
- employment opportunity information;
- job advertisement or posting;
- application forms;
- job testing materials to qualified and selected applicants;
- job interview to qualified and selected applicants;
- job offer to those selected for offer;
- individual accommodation plans;
- employee orientation materials;
- performance management processes;
- career development and advancement opportunities;
- return to work procedure;
- redeployment procedure;
- separation or termination information; and
- emergency and safety information.
INDICATORS OF PROGRESS
Most classes of employers will be required to report on their performance on selected indicators of progress which will be used to assist in tracking progress toward accessible employment. The Final Proposed Standard does not prescribe the specific indicators, but does suggest that the Ontario government consider providing support materials in this regard.
CONCLUSION
As can be seen by this fairly lengthy summary of the Final Proposed Standard, the proposed changes will transform human resources practices by moving beyond the reactive complaints-based approach of the Ontario Human Rights Code to a more proactive approach. For additional information on the Final Proposed Standard, please visit the Ministry’s website:
http://www.mcss.gov.on.ca/mcss/english/pillars/accessibilityOntario/accesson/business/employment/
Hicks Morley has been following and reporting on developments under the AODA since its inception, and has a variety of AODA-related materials available in the FTR Now section of our website’s Resource Centre.
We will continue to monitor and report on developments of this and other proposed AODA standards. For further information, please contact Leola Pon (Toronto) at 416.864.7294 or Paul Broad (London) at 519.931.5604, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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FEDERAL GOVERNMENT TO OVERHAUL FEDERAL PENSION LAWS
On October 27, 2009, the Honourable Jim Flaherty, Minister of Finance, announced proposed changes to the federal Pension Benefits Standards Act, 1985 (“PBSA”) and the associated Regulations. The PBSA and Regulations apply to pensions provided to employees employed in shipping, railway, air transportation, radio broadcasting, banks and other businesses within the legislative authority of the Parliament of Canada. While the majority of the proposed changes only apply to federally regulated registered pension plans, some changes will have a broader application.
The proposed changes are broadly based on five principal objectives:
- Enhance protections for plan members;
- Reduce funding volatility for defined benefit (“DB”) plans;
- Resolution of plan-specific problems;
- Improve the framework for defined contribution (“DC”) and negotiated contribution DB plans; and
- Modernize the pension fund investment rules.
AMENDMENTS APPLYING TO ALL CANADIAN REGISTERED PENSION PLANS
As part of the package of proposed pension reform measures, the Federal Government is proposing to modernize the federal investment rules and to increase the amount of surplus that can be held in pension plans. Both of these changes will be of interest to all employers who maintain a registered pension plan.
Since all but two provinces (New Brunswick and Quebec) have adopted the federal investment rules, the changes to these rules will apply to many provincially registered pension plans. Proposed changes to the quantitative investment limits, which supplement the overarching prudent pension investment standard, include:
- Removal of the current quantitative limits in respect of resource and real property investments;
- A change to the limit on investing the assets of a pension plan in a single entity from 10% of the book value of the plan’s assets to 10% of the market value of the plan’s assets. An exception to this rule will apply for pooled investments over which the employer does not exercise direct control (i.e., mutual fund or pooled investments); and
- A prohibition on any direct self-investment, meaning that employers will no longer be permitted to invest any pension plan assets in their own debt or shares.
The changes to the federal investment rules will automatically apply to pensions registered in British Columbia, Alberta, Manitoba and Saskatchewan because each of these provinces has adopted the federal investment rules as changed from time to time. Investment regulations will need to be amended in Ontario, Nova Scotia and Newfoundland before the changes are effective in those provinces.
Another proposed change applicable to all pension plans will increase the amount of surplus a pension may accumulate. Currently, the Income Tax Act requires employers to suspend contributions to a pension plan where the surplus held in the pension fund exceeds 110% of the plan’s liabilities. The Government proposes to increase the surplus limit to 125% starting in 2010. The purpose of this is to allow employers to maintain a cushion of surplus, reducing the likelihood of funding deficiencies solely as a result of market downturns. It is, however, unlikely that plan sponsors will take advantage of this increased contribution room unless the legislative regime governing surplus entitlement is also overhauled.
AMENDMENTS APPLYING TO FEDERALLY REGULATED PENSION PLANS
ENHANCED PROTECTIONS FOR PLAN MEMBERS
One of the most significant proposed changes to the PBSA will require plan sponsors to fully fund pension benefits on a plan termination. A solvency deficiency existing at the time of termination will be required to be amortized in equal payments over no more than five years and will be considered an unsecured debt of the company until satisfied. This measure is intended to improve benefit security for members by eliminating the possibility, which exists under the current rules, that a pension plan could be voluntarily terminated at a time when plan assets are not sufficient to pay the full amount of promised benefits. The proposed change will bring the PBSA rules regarding termination funding in line with the rules applicable in all other provincial jurisdictions, except Saskatchewan.
The PBSA will also be amended to provide immediate vesting of a member’s entitlement in a pension plan. Currently, the PBSA requires full vesting after two years of plan membership. Existing eligibility and locking-in rules will not be changed.
Another significant proposal will require enhanced member disclosure, including annual information regarding the funded status of a DB pension plan and the investment of a plan’s assets. In addition, an obligation to provide annual statements to former members and retirees has been introduced. Finally, the PBSA will be amended to expressly permit the use of electronic communications, where a member provides positive consent.
In addition to these significant benefit security changes, the Government has also advised that the PBSA and the Regulations will be amended as follows:
- Employer contribution holidays will be limited to situations in which a plan is fully funded with a “solvency margin” of 5%;
- Plan amendments which introduce benefit improvements will be void in cases where the amendment will cause the solvency ratio of the plan to drop below 85% (or the solvency ratio is already below 85%), unless the employer immediately funds the cost of the benefit improvement; and
- Employer declared partial terminations will be eliminated.
REDUCE FUNDING VOLATILITY FOR DB PLAN SPONSORS
Another very significant proposed change is the introduction of a new standard for calculating solvency deficiencies. The going-concern funding standard will remain unchanged.
Under the proposed new standard for calculating minimum solvency funding requirements, special payments will be based on the solvency ratio of the plan over a three year period. The year in which the current valuation is performed and the previous two years will be used to determine the average solvency ratio, using the market value of the plan’s assets in each valuation. The proposal also provides that past solvency deficiencies will be consolidated each time a new valuation is prepared. In order to implement the new solvency funding standard, the PBSA will be amended to require annual actuarial valuations.
The proposed solvency deficiency calculations are unique – no other Canadian jurisdiction has adopted similar rules.
The Government is also proposing to permit the use of letters of credit on a permanent basis to satisfy solvency payments, up to a limit of 15% of a plan’s assets.
RESOLUTION OF PLAN-SPECIFIC PROBLEMS
One of the unique changes proposed by the Government will amend the PBSA to create a “workout scheme” for distressed pension plans, to resolve plan-specific problems that arise when a plan sponsor cannot meet funding requirements. A workout scheme will permit sponsors, plan members (and unions) and retirees of a distressed plan to negotiate funding arrangements that do not strictly comply with the funding regulations in order to facilitate a restructuring of the pension plan.
Under the workout scheme, the employer will be eligible for a short moratorium on special payments. During the moratorium period, the parties (i.e., the employer, members, retirees and applicable unions) will be at liberty to negotiate changes to their pension arrangements, including the schedule of special payments. Member and retiree consent will be required in order to move ahead with the changes to the pension arrangements and the negotiated workout scheme will also be subject to Ministerial approval.
FRAMEWORK FOR DEFINED CONTRIBUTION AND NEGOTIATED CONTRIBUTION DEFINED BENEFIT PLANS
The Government is also proposing to amend the PBSA and the Regulations to provide much needed clarification with respect to the framework for DC and negotiated contribution defined benefit plans (“NCDB”) (which are generally multi-employer pension plans where the level of contributions are collectively bargained). The PBSA will be amended to provide measures specific to both types of plans, reflective of their differences from single employer DB plans.
In particular, the Government has proposed the following changes regarding DC plans:
- Explicit guidance will be provided on the responsibilities and accountabilities applicable to employers, administrators, members and service providers (the CAP Guidelines will be considered the best practices benchmark);
- SIP&Ps will no longer be required for CAP-style DC plans; and
- DC plans will have the option to permit members to receive variable benefits directly from a DC plan.
The Government is proposing to include specific rules in the PBSA and Regulations for NCDB plans. Most significantly, employer contributions will be limited to the level negotiated in the collective agreement, and accrued benefits provided under NCDB plans may be reduced if the plan is underfunded. These proposed changes along with a number of other technical changes will bring the PBSA in line with the rules applicable to NCDBs in other jurisdictions.
OTHER PROPOSED MEASURES
The Government has also proposed a litany of other significant amendments to the PBSA and Regulations. Of particular note:
- The proposed changes will provide the Minister with the authority to sign on to the proposed Agreement Respecting Multi-Jurisdictional Pension Plans created by the Canadian Association of Pension Supervisory Authorities;
- Benefits of members who cannot be located following a plan termination will be permitted to be transferred to a yet to be named central repository;
- The schedule applicable to employer contributions will be changed to monthly payments (instead of quarterly).
The Government has not yet tabled the legislation or published draft regulations that will be required to give effect to the proposed changes and has not yet given a timeframe in which it expects to have these changes in force. Hicks Morley’s Pension and Benefits Practice Group will continue to monitor these developments and will provide you with further updates as they arise.
If you have any questions with respect to how these proposed changes may affect your pension plan, please contact a member of our Pension and Benefits Practice Group.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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BILL 168, THE OCCUPATIONAL HEALTH AND SAFETY AMENDMENT ACT (VIOLENCE AND HARASSMENT IN THE WORKPLACE) 2009, CARRIED AT SECOND READING
On October 20, 2009, Bill 168, the Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace) 2009 was debated and carried at Second Reading. The Bill has been Ordered referred to the Standing Committee on Social Policy by the Ontario Legislature.
As you may know, the Committee review process can take days, weeks or months, and is often difficult to predict. Subject to the Committee's schedule, your organization may wish to consider making oral or written submissions.
The Ontario Government introduced Bill 168 on April 20, 2009. If passed, the Bill would require employers to develop policies to address workplace violence and harassment and to assess the risk of violence in its workplace. The Bill also imposes a new duty on employers to address domestic violence in the workplace, requires procedures to summon immediate help if a violent incident occurs and requires that workers be alerted to a person who has a history of violence. For more information on Bill 168, please see the April 21, 2009 FTR Now “Ontario Government Introduces Workplace Violence Legislation”.
For more information or details about the submissions process, please contact Meghan E. Ferguson (Toronto) at 416.864.7350, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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NEW RULES OF CIVIL PROCEDURE
Effective January 1, 2010, the Rules of Civil Procedure governing all civil litigation matters brought in the Superior Court of Ontario will come into force. This FTR Now highlights some of the key changes that will impact the manner in which employment-related actions are litigated, including wrongful dismissal claims, constructive dismissal claims, and claims for breach of fiduciary duty or breach of restrictive covenants.
THE NEW RULES
As a result of recommendations made by the Honourable Justice Coulter Osborne as part of the Civil Justice Reform Project, the Ontario government filed a number of significant Regulations that amend the Rules of Civil Procedure (the “Rules”). The changes to the Rules represent a focused attempt to simplify the litigation process and to increase access to the justice system by reducing the legal costs and time involved in litigating an action.
The Rules govern the procedure for all civil litigation matters brought in the Superior Court of Ontario, including employment-related actions such as wrongful dismissal claims, constructive dismissal claims, and claims for breach of fiduciary duty or breach of restrictive covenants. The amendments will come into effect for existing court actions on January 1, 2010 and will apply to any new actions brought after that date.
Set out below are some of the key changes that will be of particular interest to employers.
CHANGES TO JURISDICTION
Currently, actions for $50,000 or less may be brought under the Simplified Procedure. The Simplified Procedure has fewer procedural steps and was an attempt to streamline the litigation process for claims of smaller monetary value. Effective January 1, 2010, the Simplified Procedure will be mandatory for claims of $100,000 or less.
There has been a corresponding amendment made to the jurisdiction of the Small Claims Court. Currently, only claims for $10,000 or less may be brought in Small Claims Court. This will be increased to $25,000 in January 2010.
CHANGES TO THE DISCOVERY PROCESS
As noted above, the Simplified Procedure was implemented to lower the costs of going to trial by eliminating several procedural steps, the most notable of which is examinations for discovery. Examinations are, other than the trial, often the most expensive part of a litigation action. However, as of January 1, 2010, parties in a Simplified Procedure action will have a right to examine the other party for discovery for a maximum of two hours.
For litigants with actions that are in the regular procedure (those with claims of $100,000 or more as of January 1, 2010), examinations for discovery will be limited to seven hours of examination per party, unless the parties consent to longer examinations, or obtain a court order. This may significantly reduce the cost of litigation in many employment-related matters.
In addition, the amendments also introduce the concept of “proportionality” to the discovery process. It is anticipated that judges will utilize this concept of proportionality to place boundaries on questions from counsel and requests for production of documents. The new Rule 29.2 stipulates that in determining whether a question must be answered or a document produced, the court must consider whether: a) the time required would be unreasonable; b) the expense would be unjustified; c) it would cause undue prejudice; d) it would unduly interfere with the orderly progress of the action; and, e) the information is available elsewhere. The court is also directed to consider whether an order for production would result in an “excessive volume of documents” being produced. This change is particularly important with respect to electronic documents such as e-mails, given that tens of thousands of documents are often involved.
Litigants will also be required to agree upon a Discovery Plan, which will, among other things, require the parties to set out in writing key dates by which certain steps in the discovery process are to occur, including the service of affidavits of documents and oral or written examinations. The Rules specifically incorporate “The Sedona Canada Principles Addressing Electronic Discovery” into discovery plans.
The current requirement in the Rules that parties disclose all documents “related to any matter in issue” will be changed to “relevant to any matter in issue”. The intent of this change, according to the Summary of Findings and Recommendations of Justice Osborne, is to discard the broad “semblance of relevance” test and replace it with a simple relevance test. This new wording, combined with the other changes limiting the length and scope of the discovery process, may result in parties being required to produce fewer documents.
CHANGES TO SUMMARY JUDGMENT MOTIONS
The purpose of a summary judgment motion is to obtain judgment on one or all of the issues in dispute, without the necessity of a trial. The amendments will result in the following changes to the rules governing summary judgment motions, and appear to be designed to increase the number of actions that can be disposed of through a summary judgment motion rather than a full-fledged trial:
Judges conducting summary judgment motions will be able to:
- conduct “mini-trials”, and order that oral evidence be presented, with or without time limits on its presentation;
- Weigh the evidence;
- Evaluate credibility; and
- Draw any reasonable inference from the evidence.
Further, the cost consequences of bringing an unsuccessful summary judgment motion have been lessened. Whereas the presumption in the current Rules is that a party who brings an unsuccessful summary judgment motion should pay the other party’s costs on a substantial indemnity basis, this presumption is eliminated under the amended Rules. The amended Rule 20.06 now indicates that cost sanctions on a substantial indemnity scale are available if a party “acted unreasonably” by making or responding to the motion, or a party “acted in bad faith for the purpose of delay”.
CONCLUSION
In summary, the amendments to the Rules are a serious attempt to increase access to justice by making the civil litigation process cheaper and faster. Only time will tell whether or not the amendments achieve these goals in practice.
The amendments to the Rules are comprehensive and we have only outlined some of the more major changes. Should you wish any further information, please contact Kathryn L. Meehan (Waterloo) at 519.883.3120 or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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WSIB LAUNCHES SIEF PILOT PROJECT
On September 21, 2009, the Workplace Safety and Insurance Board (“WSIB”) launched a pilot project implementing important new changes to the way it administers its Second Injury and Enhancement Fund (“SIEF”). In this FTR Now, we discuss the new SIEF administrative process.
SIEF POLICY
SIEF was established to provide cost relief to employers where a prior disability has caused or contributed to a compensable accident or where that pre-existing condition has prolonged or enhanced the period resulting from an injury.
Where these factors exist, the WSIB may award cost relief of 25% to 100%, depending on the severity of the accident and the medical significance of the pre-existing condition.
Where a worker’s benefit entitlement is awarded on an aggravation basis, the WSIB may award 50% SIEF cost relief. Where a worker’s pre-existing condition is entirely responsible for the accident, 100% SIEF cost relief may be awarded.
THE CONSULTATION INITIATIVE
In February, 2009, the Chair of the WSIB initiated a consultation process with stakeholders, aimed at determining how to best achieve a sustainable future for the WSIB.
In an external consulting report provided to the WSIB by Morneau Sobeco entitled “Recommendations For Experience Rating” (the “Report”), and throughout the consultation process, concerns regarding SIEF were identified.
Specifically, the number of claims receiving SIEF cost relief have significantly increased in recent years, with about 30% of benefit costs being excluded from the calculation of experience rating factors.
The Report observed that SIEF is an area within the workplace safety and insurance system which is potentially unfair as it has shielded employers from a portion of their accident costs, resulting in higher experience rating rebates.
CHANGES TO THE ADMINISTRATION OF SIEF
On September 21, 2009, the WSIB launched a pilot project in its Hamilton office. The Project involves an Assistant Director who, with nine (9) staff members, will be responsible for determining eligibility for SIEF cost relief.
- The SIEF pilot project adopts the following process:
- the WSIB will continue to apply its SIEF policy;
- a request for SIEF cost relief should be submitted to the WSIB decision-maker responsible for a claim;
- the WSIB Case Manager will refer the request for SIEF to a SIEF Case Manager, a member of the new SIEF team;
- the SIEF Case Manager will review the request and provide the employer with a decision and reasons;
- an employer who is seeking a reconsideration, intending to object to a denial of SIEF cost relief or seeking a higher quantum of SIEF cost relief can apply directly to the SIEF Case Manager who rendered the decision;
- the name and contact information for the SIEF Case Manager assigned to a claim can be obtained from the WSIB by telephoning the general inquiry number at 416-344-1000 or 1-800-387-0750;
- all other aspects of the worker’s WSIB claim will be managed by the Case Manager (e.g. return to work); and
- an employer continues to have the right to appeal the SIEF decision to the WSIB’s Appeals Branch and beyond to the Workplace Safety and Insurance Appeals Tribunal.
Should you require any further information about the SIEF pilot project and how it may affect your organization, contact William LeMay (Toronto) at 416.864.7276, Jason Mandlowitz (Toronto) at 416.864.7278, or your regular Hicks Morley Workplace Safety and Insurance lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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MOL TO TARGET SLIPS, TRIPS AND FALLS IN A SCHOOL BOARD SAFETY BLITZ
The Ministry of Labour (“MOL”) has announced a series of safety blitzes scheduled for November of 2009 that will target slips, trips and falls (“Falls”), and that may affect your schools.
Inspectors will visit schools to discuss Falls and to review plans to prevent Falls, particularly in parking lots [1], and will focus on assessing the measures being undertaken by schools to prevent Falls, including policies, procedures, communications strategies and training.
In this FTR Now, we outline the Ministry’s new safety initiative and discuss some of the preventative measures your School Board may wish to implement to minimize the hazards posed by Falls.
THE INITIATIVE
The MOL’s safety blitzes are conducted through Safe at Work Ontario, a program which focusses on improving workplace health and safety practices through education, training and enforcement of primarily the Occupational Health and Safety Act. The Safe at Work Ontario program works in partnership with the Workplace Safety and Insurance Board and Ontario’s Health and Safety Associations.
An important aspect of the Safe at Work Ontario program is the performance of sector and hazard-specific inspection blitzes.
The purpose of the blitzes is to raise awareness of particular workplace hazards, to promote ongoing compliance with the Occupational Health and Safety Act and its regulations, and to enforce measures regarding non-compliance.
OTHER BLITZES WHICH MAY BE COMING
The MOL is also considering a blitz for educational institutions, such as high schools, specifically targeting woodworking shops and hazardous chemicals in classes and labs.
WHAT YOU CAN DO!
Advance notice of the blitzes can allow your Board to prepare for possible MOL visits.
School Boards should be proactive in auditing where Falls may occur on their school properties, to ensure they adequately protect the safety of workers, students and others and comply with all legislative and regulatory requirements. Any policies and procedures should be current and show that the School Board and individual schools are taking all necessary steps to ensure a workplace free of hazards that could cause injury.
For example, any policies could outline protocols for snow clearing and spreading salt/sand on parking lots and around the school’s property during inclement weather. All steps and surrounding areas of schools should be clear of all obstacles and properly maintained at all times. Similarly, the corridors and traveled spaces within the schools should be clear of obstacles and should be properly maintained. The policies should articulate a process for immediate reporting when a Fall has taken place, in compliance with all legislative obligations. Your health and safety program and policies should also apply to any contractors or sub-contractors you may engage.
Your Hicks Morley lawyer would be pleased to discuss your School Board’s strategy for preventing Falls in the workplace and to review with you the Safe at Work Ontario program and its possible impact on your operations.
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[1] Safe at Work Ontario TODAY Issue #2, August 2009
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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TAX TREATMENT OF TUITION AWARDS PROVIDED TO EMPLOYEES’ FAMILY MEMBERS
The Canada Revenue Agency (“CRA”) has recently reviewed its unpopular characterization of tuition fees, scholarships, and bursaries (“tuition awards”) provided by employers to family members of employees as taxable benefits to the employees. The CRA’s updated position is that a tuition award provided by an arm’s length employer for the post secondary education of an employee’s family member is to be reported as income to that family member and not as a taxable benefit to the employee. This position generally follows the outcomes in the recent court decisions in DiMaria v. The Queen, Bartley v. The Queen, and Okonski v. The Queen.
THE BARTLEY, DIMARIA AND OKONSKI CASES
These cases involved taxpayer appeals regarding the taxation of employer-paid amounts awarded to the taxpayers’ adult children as scholarships in respect of post-secondary tuition. In each case, the Tax Court of Canada (“TCC”) rejected the CRA’s characterization of such awards as taxable employee benefits, finding instead that the amounts were scholarship income to the intended recipients - the adult children. The TCC decisions were reviewed in our March 28, 2008 FTR Now “Scholarships For Adult Children - Not A Taxable Employee Benefit”.
The CRA appealed all three of these decisions to the Federal Court of Appeal (“FCA”), and in a judgment delivered in December, 2008, the FCA upheld the TCC’s decisions in DiMaria and Bartley. The appeal of the Okonski decision, which was scheduled to be heard in the spring of 2009, was discontinued.
The sole issue at appeal was whether the tuition awards were benefits received or enjoyed by the parent employees, and therefore taxable as employment income pursuant to paragraph 6(1)(a) of the Income Tax Act (Canada) (“ITA”).
In upholding the TCC’s decisions, the FCA noted that there was no evidence that the tuition awards reduced the amount that the taxpayers would have otherwise paid to support their children, perhaps implying that the FCA’s conclusion may have been different if such evidence were put forward. In this regard, the Crown had raised an argument that the parent employees were under a binding legal obligation pursuant to the Ontario Family Law Act to support their children’s post-secondary education (for those who had not “withdrawn from parental control”); therefore, this burden was relieved by the tuition awards and resulted in a benefit to the parent employee. However, the FCA did not entertain this argument as it was not raised at the TTC or in the Crown’s reply.
THE CRA’S UPDATED POLICY POSITION
The CRA has updated its published position respecting the taxation of employer-paid tuition, presumably in response to these court decisions. This position is found on the CRA webpage “Tuition fees, scholarships, and bursaries”. It has also been explained in three recent technical interpretations [1] , one of which succinctly states:
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The CRA will accept that where an arm's length employer provides a post secondary scholarship, bursary or free tuition to family members of an employee under a scholarship program, the amount will be included in the particular student's income under paragraph 56(1)(n) of the Income Tax Act (the "Act") and not the employee's income as a taxable benefit under paragraph 6(1)(a) of the Act, regardless of the criteria used to award the amount. If the particular student is eligible to claim the education tax credit under subsection 118.6(2) of the Act, the entire amount may be exempt from tax pursuant to subsection 56(3) of the Act. The employer is still required to report the amount on a T4A slip. [2] [emphasis added]
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The CRA is clear that this administrative position does not extend to employer-provided tuition in respect of elementary and secondary school education. It states that, where an employer provides free or reduced tuition to a family member of an employee for attendance at an elementary or secondary school (whether private or otherwise), such amount will be treated as a taxable employment benefit to the particular employee. [3] As support for this position, the CRA references the TCC case of Detchon v. The Queen, in which the TCC held that tuition-free enrolment of employees’ children at a private secondary level boarding school was a taxable benefit to the employees, since, as parents, they had a personal obligation to pay for the personal expenses (including schooling) of their children.
Notwithstanding the reference to Detchon, the CRA does not provide a detailed explanation for the distinction it has made between tuition awards provided for elementary or secondary school education, and tuition awards for post-secondary education. Presumably, the distinction rests on the assumption that there is financial dependence on the part of children (or other family members) who attend elementary or secondary school, and that tuition awards in respect of these family members relieves the employee of what would otherwise be a personal financial obligation.
CONCLUSION
The CRA’s administrative position is that a tuition award is not taxable to an employee if made by an arm’s length employer for post-secondary education for the employee’s family member (regardless of the financial dependency of that family member on the employee). If these conditions are satisfied, the CRA will include the amount of the tuition award in the family member’s income under paragraph 56(1)(n) of the ITA. The award will be exempt from tax pursuant to subsection 56(3) of the ITA if the family member is eligible to claim the education tax credit under subsection 118.6(2) of the ITA, regardless of the criteria that is used by the employer for purposes of determining eligibility for the tuition award.
However, the CRA will treat as taxable an employer-provided tuition award in respect of a family member’s elementary or secondary education. The CRA seems to be assuming that family members are financially dependent on the employee in these circumstances. This position probably is being taken for the CRA’s administrative convenience only, to avoid the need to evaluate employees’ personal financial obligations on a case-by-case basis. This means, however, that there will likely be factual situations where it is arguable that no taxable benefit is enjoyed by the employee (i.e., where the employee does not have a legal obligation to pay for the elementary or secondary schooling of the family member). The CRA’s administrative position respecting tuition awards for elementary and secondary education in these circumstances is potentially open to future challenge.
If you have any questions about the tax treatment of tuition awards for employees’ family members, please contact Jordan Fremont (Toronto) at 416.864.7228 or Shelby Anderson (Toronto) at 416.864.7327, or any other member of the Pension & Benefits Group.
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[1] See documents 2008-0296041E5, 2009-0312451E5, and 2009-0320591E5, which are dated, respectively, August 20, 2009, September 1, 2009, and September 2, 2009.
[2] Document number 2009-0312451E5
[3] Document number 2009-0320591E5
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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BAN ON HAND-HELD DEVICES AND DISPLAY SCREENS STARTS IN OCTOBER
In our FTR Now of September 24, 2009, “Cell Phone and Blackberry Restrictions For Drivers Are Coming Into Force: Is Your Workplace Ready?”, we provided you with a detailed overview of the new legislation restricting the use of hand-held mobile technology devices and presence of display screens while driving.
Yesterday, the Ontario Government announced that the legislation will take effect on October 26, 2009. The government has also indicated that the police will not issue tickets to drivers for violations until February 1, 2010 in an effort to give drivers an opportunity to educate themselves about the new restrictions, and ensure they are compliant.
In addition to its announcement, the government has filed a Regulation under the Highway Traffic Act and created additional exemptions to the legislation. This FTR Now provides a detailed overview of these new exemptions. Given the technical nature of the Regulation, it should be consulted directly to determine to what extent it may apply to employees working in your organization. We have provided a link to the Regulation below.
STATUTORY EXEMPTIONS
The general prohibition against the use of hand-held wireless communication devices and presence of display screens while driving is subject to the following exceptions, which are outlined in the legislation:
- global positioning system (“GPS”) navigation devices, commercially-used logistical transportation tracking systems, collision avoidance systems or instrument display screens providing information regarding the status of systems in the vehicle;
- emergency workers and emergent situations;
- the use of hand-held devices in “hands-free” mode; and
- use of hand-held devices while stopped and safely pulled off the traveled part of a road.
NEW REGULATORY EXEMPTIONS
The new Regulation has created a number of additional exemptions that apply to specific classes of persons, devices, and activities. We have outlined these below.
DISPLAY SCREEN EXEMPTION
While engaged in the performance of their duties, the following classes of persons may drive a vehicle with a computer display screen or other device visible to the driver:
1. Law Enforcement and Other Enforcement Officers
- including police, special constables, peace officers, park wardens and conservation officers; and
- provincial offences and municipal law officers, Fire Marshals and Deputy Marshals, fire chiefs and guards.
2. Persons Performing Certain Evaluation and Monitoring Functions
- drivers performing evaluation and monitoring functions relating to certain road, radio and telecommunications work; and
- automobile technicians test driving a vehicle.
3. Persons Performing Other Public Functions
Mobile data terminal display screens may be used to communicate with a dispatcher or control centre by the following persons, in the performance of their duties:
- public utilities workers;
- electricity transmitter or distributor workers; and
- road authority workers.
4. Persons Engaged in Certain Commercial Activities
Mobile data terminal display screens may also be used by persons performing their duties, and who are engaged in certain commercial activities, including:
- drivers of commercial vehicles, as defined by section 16(1) of the Highway Traffic Act;
- courier delivery vehicle drivers;
- tow truck or roadside assistance drivers; and
- licensed taxicab and limousine drivers.
EXEMPT DEVICES
The types of display screen devices expressly exempt under the Regulation are as follows:
- devices displaying conditions on the use and immediate environment of the vehicle;
- an ignition interlock device; and
- car audio controls displaying only text or static images, and hand-held devices that do this while directly connected into the audio system.
All such devices must be secured to the vehicle so that they do not move while the vehicle is in motion.
HAND-HELD DEVICE EXEMPTION
An identical exemption applies to law enforcement officers and other enforcement officers as described at (1) above with respect to the use of hand-held wireless communication devices in the performance of their duties.
However, hand-held exemptions for the Persons Performing Other Public Functions or Engaged in Certain Commercial Activities outlined at (3) and (4) above are subject to two key limitations.
First, the exemption on hand-held device use by these latter classes of person is time-limited, and will be revoked effective January 1, 2013. The government has indicated that this three-year “phase-out period” is designed to provide an opportunity for new technologies to be developed.
Second, the exemption only applies to the use of a “two-way radio”, which is defined to mean a wireless communication device consisting of a main receiver unit and a separate hand-held microphone operated by a push-to-talk function. The device must be set on a set frequency and allow for voice communication, but not for the transmission and receipt of voice communication at the same time.
However, commercial vehicle drivers using the vehicle for “personal purposes without compensation” do not fall within the exemption, and are prohibited from using such devices.
Amateur radio operators are subject to a similar, time-limited exemption in respect of two-way radios.
“PRESSING BUTTONS”
The Regulation allows for “pressing buttons” on secured wireless devices worn on the head or ear or attached to clothing, or where the buttons are being pressed to engage a hands-free mode with a secured device that can be seen by the driver at a “quick glance” and easily reached “without adjusting his or her position”.
CONCLUSION
The new Regulation provides numerous, highly technical exemptions to the prohibitions outlined in Bill 118, and should be consulted directly to determine which employees at your organization fall within its scope if any, the nature of the exemption, and whether any such exemptions are subject to additional limitations.
Your Hicks Morley lawyer would be pleased to assist your organization in developing a communications strategy and policy approach tailored to your needs to ensure that your workforce is educated about these changes, and prepared for compliance.
The Regulation may be viewed by clicking here:
http://www.e-laws.gov.on.ca/html/source/regs/english/2009/elaws_src_regs_r09366_e.htm
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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CELL PHONE AND BLACKBERRY RESTRICTIONS FOR DRIVERS ARE COMING INTO FORCE: IS YOUR WORKPLACE READY?
Earlier this year, the Ontario Government passed legislation restricting the use of cell phones and mobile technology devices while operating motor vehicles. In anticipation of its coming into force later this fall, this FTR Now addresses the precautionary measures employers should implement in order to protect the health and safety of their employees and others, minimize potential liability, and ensure compliance with the law.
THE LEGISLATION
In April of 2009, Bill 118, the Countering Distracted Driving and Promoting Green Transportation Act, 2009, received Royal Assent. As reported in our June 2009 Legislative Update, this legislation amends the Highway Traffic Act and expressly prohibits the presence in a vehicle of a television, computer or other device with a display screen if the display screen is visible to the driver. This prohibition does not apply to global positioning system navigation devices, commercially-used logistical transportation tracking systems, collision avoidance systems or instrument display screens providing information regarding the status of systems in the vehicle.
Significantly, the Bill 118 amendments also prohibit the holding or use of hand-held wireless communication devices and electronic entertainment devices, including cell phones and blackberry devices. The hand-held device prohibition does not apply to the use of such devices in “hands-free” mode, nor does it apply if the vehicle is stopped, is off the traveled part of a road and is not obstructing traffic.
Neither of the above prohibitions apply to ambulance, fire or police services. Furthermore, the hand-held device prohibition does not apply if the driver is contacting ambulance, police or fire department emergency services.
Bill 118 is expected to be proclaimed in force sometime this fall, once the government has filed supporting Regulations.
IMPACT
Bill 118 does not directly impose liability on employers with respect to mobile technology use by their employees. However, in other jurisdictions where similar legislation exists, employers have been found liable for damages in certain cases. Employers in Ontario should therefore implement precautionary measures in order to protect the health and safety of their employees and others, minimize potential liability, and ensure compliance with the law.
The Bill 118 amendments will impact your organization if:
- your employees operate company-owned motor vehicles;
- your employees operate their own motor vehicles in the course of their employment; or
- your employees are provided with mobile technology devices by the company.
THE IMPORTANCE OF PUTTING POLICIES IN PLACE
In light of the broad impact of Bill 118, employers in Ontario are well-advised to review existing policies to ensure they reflect the new prohibitions and limitations described above. This may include cell phone and blackberry use policies as well as general policies relating to the operation of motor vehicles by employees, whether company-owned or not. If your organization does not presently address mobile workforce issues, consider drafting policies as a precautionary measure. Although policies cannot absolutely insulate employers in all cases, the existence and enforcement of such policies is the first step towards reducing employer liability.
WHAT YOUR POLICIES SHOULD SAY
Every workplace is unique, and the needs of your organization will depend on many factors. Having said that, subject to the exceptions identified above relating to emergency services and emergent situations, there are a number of key strategies your organization should consider adopting:
- develop a communications strategy to inform your employees about the new legislative changes and corresponding changes to existing policies, or the development of new ones;
- in the policy, expressly require all employees to comply with the applicable laws and explain the new prohibitions and limitations clearly;
- explain what mobile device use is permitted, and under what circumstances. For example, specify the company’s position with respect to hands-free mobile technology;
- consider whether a complete ban on mobile technology use (including hands-free modes) is feasible, except in emergency situations;
- educate your employees about the policy through mandatory training sessions;
- include additional mandatory training when employees receive mobile technology devices from the company and consider issuing such devices with warning “stickers” or portable information handouts;
- provide employees with clear protocols for placing and receiving calls while they are in transit, and clarify what protocols apply to hands-free device use (if permitted at all). For example, require employees to switch off mobile devices while operating motor vehicles. Where operational needs require employees to be responsive to calls while in transit, consider requiring employees to pull over and stop the vehicle safely before placing, returning or answering calls or messages;
- obtain signed “acknowledgements” from employees to attest to the fact that they have received proper training and information about the policy changes;
- expressly protect employees who fail to answer calls or reply to messages in a timely fashion from reprisal, where those employees were operating motor vehicles at the time;
- require employees to acknowledge that employees who violate the policy are engaging in prohibited conduct for which they may be personally liable at law, should damages result from their misconduct; and
- require compliance, and consistently enforce with disciplinary measures that are clearly spelled out in the written policy.
CONCLUSION
While implementing policies and protocols cannot insulate your organization from liability in all cases, a pro-active approach supported by a strong communications and education strategy can effectively minimize the risks of such liability—and the risks mobile device use can pose to the health and safety of your employees and others.
Your Hicks Morley lawyer would be pleased to review your existing policies and help develop a strategy that will meet your organization’s needs.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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IN THIS ISSUE
On Friday, November 20, Hicks Morley will present its 2009 School Board Conference at the Holiday Inn Select (Toronto Airport). This full-day event will begin at 9:00 am with a whirlwind tour of current labour, education and employment law issues, to be followed by two in-depth plenary sessions. A complimentary luncheon will be provided. In the afternoon, attendees will be able to select from a variety of workshop presentations, concluding at 3:30 pm. Issues to be addressed will include:
- Arbitration Updates
- Safe Schools
- PDT Issues
- WSIB for School Boards
- Support Staff Issues
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- Human Rights Updates
- Attendance Management
- Special Education
- School Board Governance
- Pay Equity
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This Conference will be of interest to Directors of Education, Trustees, supervisory officers, labour relations practitioners, business officials and many others. Mark the date in your calendar. Further details regarding programme and registration will be distributed in the coming weeks.
In Elementary Teachers' Federation of Ontario v. Superior-Greenstone District School Board, 2009 CanLII 46639 (ON S.C.D.C.), a decision released on September 8, 2009, the Ontario Divisional Court dismissed an ETFO application for judicial review of a decision of Arbitrator Steve Raymond and confirmed the ability of boards to engage principals in active teaching roles.
The grievance related to six principals and vice-principals of the Superior-Greenstone District School Board who had their assignments altered such that they would perform some teaching work and less administrative work. This resulted in some teachers being displaced. However, no principal or vice-principal position was eliminated. Section 287.1(1) of the Education Act provides that a principal or vice-principal “may perform the duties of a teacher despite any provision in a collective agreement”. The Board argued that, based on this clear language, it had the right to assign principals and vice-principals to perform teaching duties, regardless of any provisions in the Collective Agreement. Arbitrator Raymond agreed.
On judicial review, ETFO asserted that Section 287.1(1) is not as broad as it appears to be, arguing that it had to be interpreted in a way that respected the importance of seniority rights. ETFO also relied on a Regulation made under the Act which provides that “when a board declares the position of a principal or vice-principal to be redundant”, the administrator can only be assigned to a position in the teachers' bargaining unit if the position is vacant. The arbitrator had held that the Regulation did not apply because there was only a reduction of administrative duties, not a redundancy.
The Divisional Court agreed with the Board's submissions (presented by Hicks Morley’s Chris Riggs and Frank Cesario) that the arbitrator's decision was reasonable, and rejected ETFO’s interpretation of the Act and Regulation. The Court confirmed that the Act gives boards a broad power to assign teaching duties to a principal or vice-principal, stating that Section 287.1(1) had “paramountcy” over any Collective Agreement provision as well as the Regulation. It emphasized that the statutory definition of “principal” includes the concept that every principal is “a teacher” assigned to perform the duties of principal.
The following quotes from the decision are particularly interesting:
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In my view, s. 287.1(1) is intended to give school boards the flexibility to assign a mix of administrative and non-administrative work to principals and vice-principals to meet a school's changing needs and requirements both from day to day and from term to term.
To pose the question in another way: does the principal of a school who teaches part of the time cease to be the principal when he or she is in the classroom teaching? A reasonable answer, and arguably the only reasonable answer is 'no'.
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If you have any questions regarding the assignment of principals and vice-principals, you can contact Barry Brown (519.433.7515), who successfully argued the case at arbitration on behalf of the Superior-Greenstone DSB, or your regular Hicks Morley lawyer.
In a recent case of importance to school board administrators, the Durham Catholic District School Board was successful in an appeal of its decision to expel a student for engaging in “cyberbullying“ (R.T. v. Durham Catholic District School Board (EA s.311.7), 2008 CFSRB 94 (CanLII)).
In this case, the Child and Family Services Review Board emphatically found that the student’s threats against another student through Facebook, although not occurring at school or during a school-related activity, were nonetheless “very detrimental” to the climate of the school under s. 310(1) of the Education Act.
Further, the Review Board found there were no mitigating circumstances in the student’s favour, even though she did not have a history of engaging in threatening behaviour and was generally a decent student.
In upholding the decision to expel her from the school, the Review Board determined that there were “no other steps” the School Board could have taken to fulfill its duty to ensure the physical and emotional safety of all students attending the school.
This decision is important because it is the first case in which the recent amendments to s. 310(1) of the Education Act have been applied to “cyberbullying”. Thus, the expanded authority to expel students for conduct not directly related to school activities now includes the ability to address the rampant problem of bullying in cyberspace.
If you have any questions regarding this subject, you can contact Dolores Barbini (416.864.7303) who argued the case for the Durham Catholic DSB, or Jason Green (416.864.7337).
The Kawartha Pine Ridge District School Board discharged an employee just before the end of his probationary period. Prior to the discharge, the employee had been issued a “letter of expectation” in accordance with the Board’s Performance Management Policy. CUPE grieved the discharge alleging that, by invoking the Policy, the Board had triggered the just cause provision of the Collective Agreement and was now estopped from relying on the probationary employee exemption.
Arbitrator Ian Springate concluded that, on its face, the Collective Agreement did not entitle the grievor to challenge his discharge as having been without just cause. The Arbitrator went on to reject the Union’s estoppel argument. He found that the Board’s application of its Performance Management Policy did not undermine the contract language which denied probationary employees access to the just cause provision. The Arbitrator stated:
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When management’s conduct is looked at in its entirety it reflects an effort on its part not to act in an arbitrary manner with respect to the grievor’s employment. That, however, does not translate into a representation to the union or the grievor that the Board would not discharge him other than for just cause.
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This Award, (Kawartha Pine Ridge District School Board and Canadian Union of Public Employees (6 April 2009, Springate)) supports the position that a Board may progressively discipline a probationary employee without compromising that employee’s probationary status or triggering the just cause provisions of the Collective Agreement.
Kees Kort of our Kingston Office successfully represented the Board in this matter. If you have any questions regarding this case, you can contact Kees at (613.541.4001), Colin Youngman (613.541.4005) or your regular Hicks Morley lawyer.
Funding constraints for positions such as Educational Assistants have forced many school boards to schedule in creative ways. Increasingly, EAs are assigned to more than one school. Travel between assignments is often time-consuming and may interfere with a school board’s hours of work obligations under its collective agreement. This was the situation faced by the Toronto District School Board in an Award issued recently by Arbitrator Paula Knopf (Toronto District School Board v. Canadian Union of Public Employees, Local 4400 - Unit C, 2009 CanLII 25126 (ON L.A.)).
Education Assistants at the TDSB normally work six hours per day. Many EAs work at two schools, three hours at each location. Assignments are based on seniority, with the result that more junior EAs often find themselves with long distances to travel between assignments. Most EAs rely on public transportation. The journey often takes more than an hour from door-to-door.
This created a problem for the TDSB since it faced an obligation under its collective agreement to provide EAs an unpaid lunch break of at least 30 minutes. Some EAs who had to travel between assignments were unable to have 30 minutes of completely free time. The union did not argue that travel time was “work” time. It was clear that the time was not paid work time. However, the union did argue that if EAs must travel to fulfill their job requirements, the travel time could not also be a “lunch period”.
Arbitrator Knopf agreed. She found that a lunch period is a period of time where an employee should be completely free to do what he or she wants, and that the disputed travel time interfered with that ability.
Given the widespread historical use of these types of assignments at the TDSB, Arbitrator Knopf commented on the impact her conclusion might have on the TDSB’s future management of its operations:
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It is apparent that this declaration may have a profound impact upon the application and operation of assignments. This may have practical effects on the Educational Assistants [sic] choices of positions and the possibilities of their placements. Postings and choices for positions may well have to take travel and distances into consideration. Further complications will arise because of differing start and break times in the various schools. In addition, what will the parties do about the vagaries of weather, public transit effectiveness (or lack thereof) and/or urban gridlock?
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In the end, the union agreed to delay seeking any “remedial impact” until the parties had an opportunity to “absorb the implications of this ruling”.
This case is a good example of collective agreement provisions being “caught up” by changing operational realities. Over time, provisions of the collective agreement that were once easy to administer can become difficult. Therefore, it is recommended that school boards regularly review their hours of work obligations to ensure that compliance continues to be feasible.
Amanda Hunter (416.864.7265) represented the TDSB in this case. If you would like to discuss the EA travel time issue or other hours of work issues, please feel free to contact Amanda or your regular Hicks Morley lawyer.
Section 43 of the Workplace Safety and Insurance Act (“WSIA”) sets out the fundamental entitlement to worker compensation under that Act. It states in part:
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A worker who has a loss of earnings as a result of the injury is entitled to payments under this section beginning when the loss of earnings begins.
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Entitlement is therefore premised upon a “loss of earnings” (“LOE”).
The WSIB’s interpretation of s. 43 of the WSIA was successfully challenged recently through a complaint to the WSIB’s Fair Practice Commission, filed on behalf of the Toronto District School Board (“TDSB”) by Hicks Morley’s David Brady. The complaint was launched as a result of the WSIB’s practice of awarding LOE benefits to retired workers after they have voluntarily left their employment and are in receipt of pension benefits. Generally, this would occur in situations where the worker is subsequently diagnosed with an occupational disease or undergoes surgery after retirement that is related to a compensable condition. Compensation is awarded despite the fact that the retired worker has no loss of earnings because he/she voluntarily retired from the workforce. Even where the worker is over 65 years of age, the WSIB grants entitlement to LOE benefits for two years.
The WSIB’s practice flies in the face of three WSIAT decisions that have found that the WSIB was incorrectly interpreting s. 43 of the WSIA and that the WSIB did not have the statutory authority to award LOE benefits where the worker had no loss of earnings. However, the WSIB has refused to follow these WSIAT decisions, taking the position that it is not bound by legal precedent. This has forced employers to appeal every decision to WSIAT, resulting in significant costs to the compensation system and to the parties involved in the appeals.
As a result of the TDSB’s complaint, the WSIB has now undertaken an expedited policy review to be completed by the end of September, 2009. Appeals involving the TDSB have been put on hold pending completion of the policy review.
Should you have any pending appeals involving the WSIB’s interpretation of s. 43 involving retired workers, you may wish to consider placing your appeal in abeyance pending the WSIB’s policy review.
For further information about the status of the WSIB’s policy review, please contact David Brady (416.864.7310), Will Lemay (416.864.7276) or Liz Kosmidis (416.864.7246).
In a disappointing but important decision issued on July 31, 2009, the Pay Equity Hearings Tribunal overturned the method used by the Brant Haldimand Norfolk Catholic District School Board in distributing pay equity adjustments across multi-step salary grids (EA/OCT/CYW Bargaining Unit v. Brant Haldimand-Norfolk Catholic District School Board, 2009 CanLII 41201 (ON P.E.H.T.)). The decision was unexpected in light of the Board’s earlier success in respect of its non-union employees and the Pay Equity Commission’s earlier finding that the Board’s approach to the plan in question did not contravene the Pay Equity Act. The impact of the decision is not limited to the Board, or even to the school board sector. This decision has potentially serious pay equity and compensation implications for any employer that has implemented multi-layer salary grids.
The issue can be described as follows:
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Where a female job class paid on a multi-step grid requires pay equity adjustments, is it permissible under the Pay Equity Act to pro-rate the adjustment made at each step of that grid based on the relationship between the rate of compensation attaching to that step and the highest possible rate of compensation (the pay equity job rate) for that job class?
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In other words, if the grid consists of 4 steps, where Step 4 is the maximum rate (100%) , Step 3 is 97% of max, Step 2 is 95% of max and Step 1 is 91% of max, can the monetary pay equity adjustment (in dollar terms) also be pro-rated in the same manner?
The OSSTF argued that pro-rating the maximum pay equity adjustment was not permissible and that the Act compelled the employer to give each step the same pay equity adjustment in dollar terms. It was the Board’s position that to provide equal dollar adjustments to the female job class salary grid would create a different shadow grid to the male comparator salary grid. Incumbents in female job classes would therefore move through a different salary grid and in a different manner than incumbents in male job classes. In the Board’s submission, the goal of the Act was to ensure that the incumbents in female job classes moved through the same salary grid as incumbents in the male comparator job class. Surprisingly, the Tribunal disagreed.
The decision turns on the definition of “position” under the Act. Section 9(3) of the Act requires that all positions in the job class receive the same adjustment in dollar terms. The Board argued that the provision was not violated by applying a pro-rated adjustment to each step in the grid based on the relationship between steps, because salary levels (and incumbents) are distinct from “positions”.
The Tribunal determined that a “position” can never be filled by more than one incumbent, since “position” refers to the work that any one individual employee will perform. Accordingly, the Tribunal determined that each pay step in a multi-step salary grid must receive the same adjustment in dollar terms, notwithstanding that this would change the salary levels and relationships between salary levels between female and male job classes.
The Tribunal’s decision is not only inconsistent with any ordinary understanding of the employment and labour relations meaning of “position” but it also wreaks havoc with traditional administration of salary grids by most school boards and other employers. It compresses the salary grids for female job classes, creates different salary grids for female job classes and their male comparators and ultimately rewards unions with advantages for which they did not bargain. It is difficult to see how the Tribunal’s determination was necessary to meet the Act’s objective of eradicating gender discrimination in wages.
The Tribunal’s decision also appears to be at odds with its own jurisprudence. For example, in 2006, Hicks Morley’s Lauri Reesor successfully argued the same issue for the Board in respect of its non-union pay equity plan and non-union salary grids.
A similar issue involving the definition of “position” is currently before the Tribunal. It is hoped that the Tribunal will re-visit the issue and its own inconsistent definition of “position”. Pending the Tribunal’s decision in that case, the Board is reviewing its options for reconsideration at the Tribunal level as well as by way of judicial review to the Divisional Court.
If you have any questions regarding this case or other pay equity obligations, you can contact Lauri Reesor (416.864.7288) or Carolyn Kay (416.864.7313).
What does the term “annualized earnings” mean when calculating the retirement gratuity of a half-time elementary teacher? In a decision involving the Trillium Lakelands District School Board, Arbitrator Dana Randall was called upon to interpret a provision in the collective agreement that generated a gratuity based upon “annualized earnings … at the rate received by the Member immediately prior to retirement” (Trillium Lakelands District School Board v. Elementary Teachers’ Federation of Ontario, 2009 CanLII 22795 (ON L.A.)).
ETFO argued that the Board had incorrectly calculated the grievor’s gratuity when it used her actual annual salary based on her half-time status. In dismissing the grievance, the Arbitrator rejected the union’s argument that “annualized salary” ought to be interpreted as equivalent to the annual grid salary of a full-time teacher. He found that while s. 180 of the Education Act permits parties to negotiate contractual language that grants part-time employees a gratuity of up to half the full-time teacher salary rate, the Act did not mandate that result.
ETFO also argued that the Board’s use of the grievor’s part-time salary amounted to a “double devaluation” of her gratuity payment. This position was based on the fact that the grievor initially accumulated only half of the sick leave credits earned by full-time teachers, only to have those credits “devalued” a second time by the inclusion of her actual half-time salary in the final calculation. Arbitrator Randall rejected this argument as well.
If you have any questions regarding retirement gratuity calculations, please feel free to contact your regular Hicks Morley lawyer or Carolyn Kay (416.864.7313), who successfully argued this case for the TLDSB.
The question of “who does what” within the school board sector has traditionally been an interesting (and sometimes contentious) issue. This is largely attributable to the vagueness of the current governance provisions of the Education Act.On November 28, 2008, the Minister advised boards of the Government’s plans to modernize and clarify these provisions. She appointed a Governance Review Committee (“GRC”) comprised of leaders in the education community. The GRC Report, issued on April 22, 2009, set out 25 recommendations for change.
On November 28, 2008, the Minister advised boards of the Government’s plans to modernize and clarify these provisions. She appointed a Governance Review Committee (“GRC”) comprised of leaders in the education community. The GRC Report, issued on April 22, 2009, set out 25 recommendations for change.
In response to this Report, on May 7, 2009, the Government tabled Bill 177, the Student Achievement and School Board Governance Act, 2009. The Bill contains a number of provisions clarifying and supplementing the roles and responsibilities of school boards, trustees and directors of education. It contemplates the establishment of Codes of Conduct for trustees containing both provincial and local obligations. It also adds several provisions dealing specifically with the role of board chairs.
Shortly after tabling Bill 177, the Ministry issued a Consultation Paper concerning what it referred to as an anticipated Provincial Interest Regulation (“PIR”). The PIR would create extensive new public reporting obligations for school boards that are designed to enhance transparency and accountability. In addition, the PIR would speak to conditions under which and methods by which the Ministry might intercede in the administration of a struggling board.
If you have any questions regarding these or other governance issues, you can contact Michael Hines (416.864.7248) or your regular Hicks Morley lawyer.
School boards increasingly find themselves under pressure to identify ways of achieving efficiencies in the delivery of curriculum. A recent arbitration award involving the Grand Erie District School Board addresses the strategy of creating “grouped classes” in which more than one subject is taught (Grand Erie District School Board and Ontario Secondary School Teachers’ Federation, District 23 (18 June 2009, Devlin)).
Article 12.06 of the Grand Erie Collective Agreement with OSSTF provides that “no teacher shall be assigned more than 3.0 courses per semester unless there is an agreement by the teacher, the Bargaining Unit and Board”. In the 2006-2007 school year, a teacher was assigned a grouped class in which she taught a Grade 11 business accounting course to 18 students and a Grade 12 business accounting course to three students. Each course had its own course code and curriculum and required the preparation of different lessons, tests and assignments. Despite this, the teacher (in her capacity as head of the Business Department) recommended that the Grade 11 and 12 business accounting courses be taught in a grouped class. She had concluded that if the Grade 12 course were not taught in the school in question, Grade 11 students might leave the school in order to take both courses elsewhere. The school had an enrolment of only 300 students.
The Federation filed a policy grievance. It argued that both terms, “course” and “class”, were used in the Collective Agreement, suggesting that the Article 12.06 limitation on “courses” could not be avoided simply by combining courses within one class. It also relied on the fact that the teacher was responsible for the delivery of curriculum associated with two distinct course codes, albeit within the same “class”.
The Board led evidence that it had been creating grouped classes since 2004, the year in which the school’s in-school staffing committee had been created, without any suggestion that such classes generated two “courses” for the purposes of Article 12.06. Furthermore, the Board established that there had been grouped classes at the school board and its predecessor dating back to the early 1990’s, always without complaint.
The Board argued that the past practice was reflective of a shared understanding of Article 12.06 that course codes were not the determining factor for the purposes of identifying “courses”. Rather, a single “course” for the purposes of Article 12.06 could involve two closely related areas of the Board’s curriculum.
Arbitrator Jane Devlin agreed with the Federation’s interpretation of the Collective Agreement, holding that the involvement of two distinct course codes would reflect two “courses” in all but a few exceptional cases. She did acknowledge that a rigid or inflexible approach was not appropriate in all cases, and that in some cases it might be necessary to consider the particular circumstances to determine if the delivery of more than one “course” was involved.
Although the Arbitrator concluded that Article 12.06 had been violated, she nevertheless dismissed the grievance. She held that the Federation, having been aware of the practice of grouping classes over several years, had led the Board to believe that it did not intend to rely upon its strict rights under the Collective Agreement. Accordingly, the Federation was estopped from asserting a violation of the Collective Agreement.
If you have any questions regarding this subject, you can contact Stephen Gleave (416.864.7208), who argued the case at arbitration for the Board, or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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RECENT DEVELOPMENTS UNDER THE AODA
It was a busy summer of new developments under the Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”), several of which employers and other organizations should note:
- the “Initial Proposed Accessible Built Environment Standard” was released for public comment;
- the “Final Proposed Accessible Information and Communications Standard” was submitted to the Minister for approval;
- the “Final Proposed Employment Accessibility Standard” was submitted to the Minister for approval; and
- the government began a four-year review of the statute.
In this FTR Now, we will review each of these developments.
BRIEF OVERVIEW OF THE AODA
The fundamental purpose of the AODA is to make Ontario fully accessible for persons with disabilities by 2025, which is to be accomplished by the gradual establishment and implementation of accessibility standards for the following areas: customer service; transportation; information and communications; the built environment; and employment. These standards are being given the force of law by being adopted as binding regulations. While voluntary compliance is a goal of the legislation, in time the AODA envisions an enforcement process involving compliance reporting, inspectors, director’s orders, and the oversight of a tribunal.
In addition to the three standards discussed in this update, there are two others that have been, or are being, developed:
Customer Service – This standard has been passed as a regulation with compliance deadlines of January 1, 2010 for the public sector, and January 1, 2012 for the private and not-for-profit sectors.
Transportation – A final proposed standard was submitted to the Minister of Community and Social Services for approval in late 2008. It has not yet been formalized in a regulation.
INITIAL PROPOSED ACCESSIBLE BUILT ENVIRONMENT STANDARD
In mid-July, the Ontario government released the Initial Proposed Accessible Built Environment Standard for public comment. The proposed Standard is a large, highly technical document that details accessibility requirements for a large variety of buildings, dwellings and public spaces. While the proposed Standard overlaps to a fair degree with the Building Code, it also goes beyond the Building Code and covers elements and places to which the Building Code does not apply, such as play areas and amusement parks.
As currently drafted, the Standard would apply both to new construction, as well as to significant renovations. There is some indication that the Committee may wish to extend the Standard to retrofitting and to private dwellings as well, though this may be beyond the Committee’s mandate at this time.
The proposed Standard addresses requirements for such elements as:
- common access and circulation;
- interior accessible routes;
- exterior spaces;
- communication elements and facilities;
- plumbing elements and facilities;
- building performance and maintenance;
- special rooms;
- spaces and other elements;
- transient residential;
- recreation elements and facilities;
- transportation elements; and
- housing.
All organizations should consider reviewing the proposed Standard to determine what impact it might have on your operations and bottom line. You may make submissions to the Committee on the proposed Standard until October 16, 2009.
For details on the proposed Standard, including how to submit comments and a costing study performed by the IBI Group, please go to the website of the Ministry of Community and Social Services at:
http://www.mcss.gov.on.ca/mcss/english/pillars/accessibilityOntario/accesson/business/environment/index.htm
FINAL PROPOSED ACCESSIBLE INFORMATION AND COMMUNICATIONS STANDARD
In late May of this year, the Accessible Information and Communications Standards Development Committee submitted its Final Proposed Accessible Information and Communications Standard to the Ministry for approval. The Standard and supporting materials were recently posted on the Ministry’s website.
In a previous FTR Now published on January 16, 2009 (“Proposed ‘Accessible Information and Communications Standard’ under the AODA”), we discussed the potential impact of the draft version of this Standard, which we noted could be quite substantial for many organizations.
It would appear that the Committee received a large amount of feedback on the proposed Standard and made significant changes in response, including:
- the classes of organizations to which the Standard will apply has been changed to three basic classes based on number of employees – under 50, between 50 and 99, and 100 or more – with no distinction between the public and private sectors;
- the complex distinction between “prepared, predictable, and unpredictable” communications has been removed;
- the references to IT-based information and communication systems and business enterprise systems have been removed (the latter was transferred to the Committee developing the Final Proposed Employment Accessibility Standard to be considered in the context of that standard); and
- the technical requirements for websites and website content have been modified.
There still remain significant obligations on all organizations to whom the Standard applies, including:
- the development of policies, practices and a statement of commitment;
- the establishment of accessible feedback and complaint processes;
- the requirement to provide training to employees, volunteers and third parties;
- the establishment of special rules for the communication of emergency and public service information;
- the requirement to develop accessible websites, web content and other communications;
- new requirements for organizations that generate computerized point of sale receipts; and
- special requirements for “priority areas”, including health, education (including requirements for libraries – both educational and public), legal and financial.
The Committee’s proposals for compliance time frames were contained in a document separate from the Standard. Rather than establish time frames based on class of organization (as was initially proposed), the Committee has now proposed time frames that will take into account both the requirement in question and the class of the organization to which it applies. Most requirements have a compliance time frame of 5 years or less, with a very small number stretching out as far as 10 or 15 years.
While the content of the final proposed information and communication standard may still change upon review by the Minister, all organizations should review it and its proposed time frames to assess its potential impact. More information can be found at:
http://www.mcss.gov.on.ca/mcss/english/pillars/accessibilityOntario/accesson/business/information/index.htm
FINAL PROPOSED EMPLOYMENT ACCESSIBILITY STANDARD
We understand that the Employment Accessibility Standards Development Committee recently submitted the Final Proposed Employment Accessibility Standard to the Minister for approval, but details have not yet been released as of the date of this publication. Hicks Morley will closely follow any developments and will report on them once the details are released.
REVIEW OF THE AODA
The AODA contains a provision requiring that the government appoint an individual to conduct an independent review of the legislation within four years of its passing. That review process is currently underway. The review is being conducted by Mr. Charles Beer, a former cabinet minister and now a principal with the organization, Counsel Public Affairs Inc.
There are two basic ways to participate in the review. The first is by making written submissions by October 15, 2009 (the suggested deadline) or October 31, 2009 (the final deadline). The second is to participate in public meetings, which are scheduled to occur in October in Sudbury, Ottawa, Toronto and London. If you wish to register to participate in a public meeting, you must do so by September 21, 2009. Details on the review process can be found at:
http://www.mcss.gov.on.ca/mcss/english/pillars/accessibilityOntario/accesson/participate.htm
For further information, please contact Paul Broad (London) at 519.931.5604, Leola Pon (Toronto) at 416.864.7294 or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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SUPREME COURT OF CANADA ISSUES DEFINITIVE GUIDANCE ON PENSION PLAN EXPENSES AND USE OF SURPLUS
Today, the Supreme Court of Canada released its judgment upholding the Ontario Court of Appeal decision in Kerry (Canada) Inc. v. DCA Employees Pension Committee.
The Supreme Court’s decision provides helpful guidance on a number of important issues, including the payment of plan expenses from a pension fund, the use of actuarial surplus under a defined benefit (“DB”) portion of a pension plan to fund employer contributions to a defined contribution (“DC”) portion of the same plan, the appropriate standard of review to be applied to decisions of the Ontario Financial Services Tribunal (“FST”), and the circumstances under which pension related litigation costs are properly borne by a pension fund.
Of particular interest to employers, the Supreme Court confirmed that reasonable pension plan administration expenses are chargeable to a pension fund, unless expressly prohibited by the governing plan documentation (past and present). Also, the Court confirmed that there is no general rule against applying the surplus accumulated in a DB portion of a plan towards an employer’s contribution requirement under the DC portion of the same plan.
HISTORY
The plan was established in 1954 by the Canadian Doughnut Company Limited (later, DCA Canada Inc.) and subsequently assumed by Kerry (Canada) Inc. (the “Company”) in 1984. Throughout that time period, the plan was a DB plan funded through a trust, and the Company’s practice was to pay the administrative expenses of the plan out of general corporate revenue. The original plan text was silent on the issue of payment of plan expenses. The trust agreement specified that the trustee’s fees and any expenses incurred in the execution of the trust would be paid by the Company. The Plan was amended in 1975 to explicitly allow for the payment of expenses from the fund. Notwithstanding the amendment, however, it was not until 1985 that the Company began to have all third party plan administration expenses paid out of the trust fund.
In 2000, the Plan was amended to create a DC component for new employees. Existing DB members were given the option to convert their accrued defined benefits to a DC account balance. The Company had, since 1985, taken contribution holidays and continued to do so, using surplus held in the trust fund to make its DC contributions.
The conversion prompted a group of members and former members to ask the Ontario Superintendent of Financial Services (the “Superintendent”) to investigate the propriety of the Company’s actions, and specifically to order the Company to: 1) reimburse all plan expenses paid out of the pension fund, 2) reimburse all contribution holidays taken since 1985, and 3) refuse to register the 2000 plan amendment that created the DC component of the plan.
Following an investigation, the Superintendent proposed to order the Company to reimburse the pension fund for administrative expenses that were not for the exclusive benefit of the members. The Superintendent, however, did not refuse to register the 2000 plan amendment creating the DC component, and did not require the Company to pay back the approximately $1.5 million taken in contribution holidays. Following a hearing on the issues, the FST found that, for the most part, plan expenses had been properly paid from the Plan, notwithstanding trust language that stated that the pension fund was for the “exclusive benefit” of the members. However, it ordered the Company to repay certain consultant fees related to the conversion which were more properly characterized as employer expenses. The FST upheld the Superintendent’s decision not to order the Company to pay amounts taken as contribution holidays from 1985 since it would have allowed the Company to use surplus to meet its contribution obligations under the DC component of the plan, subject to a plan amendment. The FST’s decision was largely overturned by the Divisional Court, and the Company appealed.
On the issue of plan expenses, the Court of Appeal held that, in the absence of a statutory requirement, or a specific undertaking made in the documents constituting the plan (such as the Company’s undertaking to pay trustee fees and expenses), administration expenses could generally be paid from the trust fund. Silence in the documents did not create an obligation for the employer to pay. Consequently, it found that amendment to the plan expressly permitting reasonable administration expenses to be paid from the fund was permissible despite the “exclusive benefit” language in the trust agreement. The Court of Appeal clarified that only those expenses incurred on behalf of the plan were properly payable from the fund, and that expenses incurred by the Company for advice about the addition of the DC component under the plan were, in fact, expenses incurred for the benefit of the Company, thus largely reinstating the FST decision.
The Court of Appeal also affirmed the FST’s decision that the Company was permitted to take contribution holidays under the DB component of the plan and that the contribution holiday taken in respect of the DC component was also valid, subject to the requirement of a formal plan amendment to include all plan members as beneficiaries under the trust. In doing so, the Court of Appeal rejected the Divisional Court’s finding that the addition of the DC component created two separate plans with two separate pension funds.
Finally, the Court of Appeal held that the FST’s decision not to order the Superintendent to refuse registration of the 2000 amendment was reasonable. It reached this conclusion despite finding that the conversion notice given to plan members may have been misleading. This aspect of the decision was not appealed to the Supreme Court.
THE SUPREME COURT OF CANADA DECISION
Applying a standard of “reasonableness”, the Supreme Court upheld the Court of Appeal decision.
PLAN EXPENSES
The Court agreed that there was nothing in the Ontario Pension Benefits Act (“PBA”) or at common law which obligated an employer to pay the expenses of administering a pension plan. It also held that the plan documents did not require, expressly or implicitly, that the Company be responsible for the payment of the plan expenses. In considering the language of the trust agreement, which the Court acknowledged required the Company to pay the expenses incurred specifically in the operation of the trust, the Court held that while the trust is an element of the plan, the expenses related to the execution of that trust are not inclusive of the broader administrative expenses of the pension plan such as actuarial, accounting, counsel and investment services.
The Court held that the exclusive benefit language in the trust agreement did not require the Company to assume responsibility for the plan expenses. It noted that the term “exclusive benefit” does not mean that no one but the members can benefit from a use of the trust funds; the exclusive benefit language did not, in its view, preclude an employer from enjoying a number of incidental benefits related the existence of the pension plan. The Court therefore held that it was to the “exclusive benefit” of the members to have the plan continue, and that the payment of plan expenses was a necessary component of its continuation.
The Court clarified that since the Company was not obligated to pay all plan expenses in this case, payment of proper administration expenses from the pension fund was not a partial revocation of the trust. Also, the Court concluded that the analysis does not change based on whether the expenses are charged by third parties or the employer itself. Once it has been determined that trust funds can be used for the payment of administration expenses, what matters is whether the funds are paying reasonable and “legitimate expenses necessary to the integrity and existence of the plan”, not who provided the services.
CONTRIBUTION HOLIDAYS
The Court agreed that, from its inception, the plan permitted the Company to take contribution holidays. On the issue of using DB surplus to fund employer contributions to the accounts of DC members, the majority of the Court held that, because there is no statute or regulation prohibiting having both DB and DC components in a single plan or prohibiting a contribution holiday in respect of either component, the availability of a contribution holiday is dependent on the governing plan documents. The majority of the Court found that the DB portion and the DC portion were part of a single plan, and that, provided the plan is retroactively amended to make members of the DC portion beneficiaries of the DB trust fund, the terms of the plan permitted the contribution holiday.
The Court held that a retroactive amendment to make the DC members beneficiaries of the DB trust fund was not prevented by legislation. Since the DB members have no rights to actuarial surplus while the plan is ongoing, a retroactive amendment of this nature would not be taking away any vested property rights of the DB members; their interest in the actuarial surplus is only to ensure that it is neither withdrawn or misused.
LITIGATION COSTS
With respect to whether the costs of the litigation should be paid by the pension fund, the Court found that the nature of the litigation was adversarial and that expenses should not be paid from a pension fund in such circumstances. It also found that there was no reason to penalize the Company, since payment of legal costs from the fund could result in an earlier end to the Company’s contribution holiday.
CONCLUSIONS
The Supreme Court’s decision in Kerry has provided welcome clarification to a number of issues affecting employers who sponsor and administer registered pension plans. It establishes conclusively that there is no presumption that it is the employer’s obligation to pay plan expenses, unless expressly required by the governing plan documentation. The decision also lays out a framework that assists our understanding of when employers will be permitted to use DB actuarial surplus to fund contributions under a DC portion of the same plan.
Employers or administrators wishing to charge administrative expenses to the pension fund, or that intend to take contribution holidays, should carefully examine all governing plan documentation, both current and historical, to determine whether any potential barriers exist.
A link to the full text of the decision is provided below:
If you have any questions about this important case, please contact one of the following members of the Pension & Benefits Group.
Elizabeth Brown Chair, Pension & Benefits Practice Group
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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KERRY DECISION TO BE RELEASED THIS FRIDAY AUGUST 7TH
The Supreme Court of Canada (SCC) has announced that its decision in Elaine Nolan et al. v. Kerry (Canada) Inc. et al will be released at 9:45 a.m. on Friday August 7, 2009. It is anticipated that the SCC decision will provide much needed guidance on a number of important issues, including:
- the use of pension fund assets to pay for plan expenses;
- the use of pension plan surplus to fund employer DC contribution obligations; and
- the standard of review from decisions of the Ontario Financial Services Tribunal, involving the application of common law and trust principles to the interpretation of pension plan and trust documentation.
We will be sending out a summary of the decision to all of our clients who are on our Pension & Benefits mailing list.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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COVERT SURVEILLANCE GUIDELINES FOR FEDERALLY REGULATED EMPLOYERS
On May 27, 2009 the Office of the Privacy Commissioner of Canada issued an OPC Guideline Document: “Guidance on Covert Video Surveillance in the Private Sector”. The Guideline Document outlines the Commissioner’s recommendations to private sector organizations engaging in covert surveillance in the course of commercial activity, as well as to federally regulated employers engaging in covert surveillance with respect to their employees. These activities are governed by the Personal Information Protection and Electronic Documents Act (“PIPEDA”), which the Commissioner is responsible for enforcing.
The Commissioner applies a fairly stringent test in order to justify the undertaking of covert surveillance, and identifies four factors to be considered when determining whether it is appropriate:
- First, the organization must have a strong basis to support the use of covert video surveillance, and not a mere suspicion.
- Second, the surveillance must be clearly related to a legitimate business purpose, and there should be a strong likelihood that the surveillance will help achieve the purpose.
- Third, an organization should first weigh whether the loss of privacy is proportional to the benefit gained.
- Fourth, an organization should also first consider whether other less “privacy” invasive means of collecting the personal information would be more appropriate prior to engaging in covert surveillance.
The Guideline Document notes that consent is normally required when engaging in covert surveillance. According to the Commissioner, consent may be implied in certain cases, such as when an individual has initiated legal action and such surveillance is necessary to defend the action. The Guideline Document further notes that, in many cases, covert surveillance will be conducted without consent and that, in such cases, the organization must justify the surveillance under one or more of the statutory exceptions to PIPEDA’s consent requirement.
The Guideline Document also provides recommendations on documenting covert surveillance and developing a covert surveillance policy, and also provides recommended steps when engaging private investigation companies to engage in covert surveillance.
Federally regulated employers, such as banks and inter-provincial transportation companies, as well as provincial companies which engage in covert surveillance in relation to their commercial activities are advised to review the Guideline Document, which can be found on the Commissioner’s website at:
While the guidelines are not legally binding, they provide some insight into how the Commissioner may adjudicate in cases involving covert surveillance.
For more information, please feel free to contact any member of the firm’s Information and Privacy Group.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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PRIOR APPROVAL FOR COMMUTED VALUE TRANSFERS NOW REQUIRED By: Stephanie J. Kalinowski and Shelby L. Anderson
Due to recent changes to the Regulations under the Ontario Pension Benefits Act, administrators of underfunded defined benefit pension plans registered in Ontario must in certain situations obtain the approval of the Superintendent of Financial Services of Ontario (the “Superintendent”) before transferring any part of the commuted value of a terminated member’s deferred pension or making an annuity purchase. The changes to the Regulations came into effect on June 19, 2009.
OLD RULES
When a member terminates employment, the member may elect to transfer the commuted value of his or her deferred pension to another pension plan, a prescribed retirement savings arrangement or to purchase an annuity. The plan administrator must comply with this election within a certain timeframe. Until these amendments, if a plan had a transfer ratio (a measure of assets to liabilities) of less than 1.0, the plan administrator could transfer only the portion of the commuted value equal to the plan’s transfer ratio, with the remainder payable within five years. However, there were exceptions to this rule which allowed 100% of the commuted value to be transferred if:
- the amount of the transfer deficiency was paid into the pension fund in a lump sum prior to the payment of the commuted value, or,
- the total of all transfer deficiencies for transfers since the valuation date of the most recently filed valuation report was less than 5% of the assets of the plan at that time.
In many cases, plan administrators were able to routinely use these exceptions to avoid a partial commuted value payment to the terminating member. The purchase by a plan administrator of an annuity to pay a pension fell under similar rules.
THE AMENDMENTS
The amended Regulations require an administrator to seek the Superintendent’s approval before transferring any part of the commuted value when:
- the transfer ratio set out in the most recently filed valuation report is equal to or greater than 1.0 and the administrator knows, or ought to know, that the transfer ratio has dropped to a value less than 0.9; or
- the transfer ratio set out in the most recently filed valuation report is less than 1.0 and the administrator knows, or ought to know, that the transfer ratio has dropped by 10% or more.
The economic events of the last year or so have negatively affected the funded status of many plans. Even if a valuation has not been completed recently, many plan administrators will find that these new rules prompt an examination of how their plan’s transfer ratio has changed since the last filed valuation before making any further commuted value transfers or annuity purchases.
- If no terminations or annuity purchases are expected in the near future, it may not be necessary to undertake the review and application process immediately. However, plans where terminations occur regularly or plans expecting a large number of terminations (for example, where the employer is downsizing) will need to complete the review and make the request for approval sooner rather than later, to avoid delays in completing pending transfers.
APPLICATION PROCESS
The Financial Services Commission of Ontario (“FSCO”) recently published Policy T800-402, effective July 7, 2009 (the “Policy”) to discuss the review and application process. According to the Policy, the request must include an actuarial certification which contains the updated transfer ratio. Administrators must also include a completed prescribed “Request for Approval” form that is signed by the plan’s actuary. On the form, the administrator must indicate whether top-up payments will be made, whether the administrator will track the transfer deficiencies to ensure they stay within the 5% limit, or whether only partial commuted value transfers will be made. The administrator may also make other proposals to FSCO for its consideration, although approval of unique proposals may take longer.
The Superintendent may approve the transfer of either full or only partial commuted values, and may impose terms and conditions he considers appropriate in the circumstances. The Superintendent’s approval will remain in effect until a new valuation with a determination date later than the date used in the request for approval is filed, or until a new request for approval is made.
FREQUENCY OF REVIEW
The amended Regulations do not specify how often the transfer ratio must be reviewed. However, the Policy states that it would be appropriate for the administrator of a pension plan to review the plan’s transfer ratio on a “regular basis” and that the administrator should review the transfer ratio whenever a commuted value transfer or annuity purchase is to be made, unless a review has been done in the past three months.
The implication of the Policy is that a review of the transfer ratio (and possibly, additional requests for approval) may be needed as often as quarterly, depending on how frequently transfers must be made and the health of the fund. Administrators and pension committees will need to establish protocols to ensure that the review requirement is satisfied.
The Policy also clarifies which transfer ratio must be used for plans currently undergoing valuations as at determination dates late in 2008 or early 2009, which will not be filed until later in 2009. Once an updated transfer ratio is determined as of a more current date than the date of the new valuation, that updated ratio is substituted for the ratio in the later filed valuation report, even if the ratio in the report is higher.
If you have any questions as to the application of the amended Regulations and how you might be affected, please contact any member of the Hicks Morley Pension and Benefits Group.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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DEFINING “EMPLOYER” FOR PENSION FUNDING PURPOSES
The Financial Services Tribunal (the “Tribunal”) recently released a decision that discusses, in detail, who is the employer for funding purposes under the Pension Benefits Act (“PBA”). This decision will be of interest to employers who participate in pension plans with more than one employer, but are not multi-employer pension plans or “MEPPs”, if the pension plan has a solvency deficiency. The decision addresses the employer’s responsibility for funding deficits when an employer terminates participation in the pension plan.
BACKGROUND
Founded in 1897, the Victorian Order of Nurses (“VON”) is a not-for-profit, national health care organization and registered charity offering a wide range of community health care services. Historically, the VON has had a network of branches that deliver community health care services across 10 provinces. Until 2006, this network of branches was comprised of both local branches (“Local Branches”) and national level branches. The national level branches are divisions of the VON, not separate legal entities, and employees were employed directly by VON.
The Local Branches, on the other hand, were separately incorporated legal entities. Prior to October 2006, Local Branches were authorized to carry on the objects of the VON in their local jurisdictions within Canada. The Local Branches employed their own employees, maintained their own payroll system, collectively bargained directly with their unions and set the terms of employment for their non-unionized staff, within guidelines established by the VON. In many ways, VON played a significant role in the operations and affairs of the boards of Local Branches.
THE VON CANADA PENSION PLAN
The VON established the VON Canada Pension Plan (the “Plan”) effective January 1, 1958 as the continuation of two prior plans. All Local Branches participated in the Plan. There were no participation agreements or other agreements between the VON and the Local Branches which stipulated the roles, duties and responsibilities of the Local Branches in relation to the Plan. Nevertheless, the Local Branches were obliged to have their employees participate in the Plan. The Local Branches were required to perform certain administrative functions in relation to the Plan, such as the enrollment of members and the deduction and remittance of contributions.
The Plan is a defined benefit pension plan that is funded by both employee and employer contributions. All employees of VON and the Local Branches, were required to participate and accrue pension benefits under the Plan.
The Plan originally did not address the remittance of contributions in the event there was a solvency deficiency. In 1993, VON amended the Plan to stipulate that VON and the Local Branches were obligated to remit contributions to the Plan required to amortize any unfunded liability or solvency deficiency that might arise from time to time. On January 9, 1999, VON implemented further amendments to the Plan, which included a formula to calculate such contributions. Local Branches were required to make payments to amortize any unfunded liability or solvency deficiency that might arise based on the ratio of a Local Branches’ current service contributions to the total annual current service contributions of VON and the Local Branches. The Plan text did not address how a wind up deficit was to be funded.
THE SIX SEPARATE BRANCHES AND THE INSOLVENT BRANCHES
In 2006, VON implemented a new organizational strategy called “One VON”. Essentially, there would be a single VON entity and no branch would be separately incorporated in future. Each Local Branch was required by the VON to make a decision as to whether it intended to join the One VON or operate outside of the VON framework. The Plan had a solvency deficiency at this time.
A number of Local Branches decided to leave VON instead of joining the new One VON organizational framework. The employees of those departing Local Branches (the “Six Separate Branches”) were no longer permitted to accrue service in the Plan. Shortly after leaving VON, the Six Separate Branches were informed for the first time by VON that each of them was required to make special payments to the Plan fund in respect of the solvency deficiency related to their employees’ benefit liabilities.
Prior to the departure of the Six Separate Branches, VON declared partial wind ups of the Plan with respect to the closure of a number of Local Branches, due to bankruptcy or insolvency (the “Insolvent Branches”). VON determined that the Insolvent Branches were responsible for the wind up deficit attributable to their employees’ benefits. As these branches were bankrupt and could not make the special payments required under the PBA to fund the deficits, VON applied to the Superintendent of Financial Services (the “Superintendent”) for a claim against the Pension Benefits Guarantee Fund (the “PBGF”) in respect of the funding of these benefits.
THE SUPERINTENDENT’S NOTICE OF PROPOSAL
On February 8, 2008, the Superintendent issued a Notice of Proposal to VON refusing to approve the partial wind up reports filed by the VON in respect of the Insolvent Branches. The Superintendent also did not approve the application for a claim against the PBGF. Instead, the Superintendent ordered VON to fund the wind up deficits related to each of the Insolvent Branches on the basis that the Plan was a single employer pension plan sponsored and administered by the VON and, as such, VON was solely responsible for funding the Plan.
VON sought a hearing with the Tribunal on the basis that VON was not the employer of the Insolvent Branches’ employees and therefore could not make contributions to the Plan to fund the wind up deficits.
The Six Separate Branches obtained party status to the hearing with respect to the issue of whether VON was responsible for any solvency deficit relating to the benefits of employees of the Six Separate Branches.
The Six Separate Branches took the position that VON had always been the sole employer for the purposes of the PBA and, therefore was solely responsible for any solvency deficit relating to all members and former members of the Plan and any wind up deficits relating to the Insolvent Branches. Two of the VON’s unions also obtained party status and argued that VON was the sole employer for funding purposes, or in the alternative, the VON and the Local Branches should be jointly and severally liable for funding the solvency deficit.
THE TRIBUNAL’S DECISION
The Tribunal characterized the issue before it as determining which entity participating in the Plan was an employer for the purposes of the PBA, and as such were required to make contributions to fund the Plan, including wind up deficits. In short, the Tribunal concluded the following:
- VON was not the employer of Plan members employed at the Insolvent Branches and was therefore not responsible under section 75 of the PBA for funding the wind up deficits associated with the Insolvent Branches’ employees;
- the Tribunal did not have jurisdiction to make an order in respect of who was responsible to fund of the solvency deficiencies relating to employees and former employees of the Six Separate Branches; and
- there was no joint and several funding obligation among employers.
TRIBUNAL’S JURISDICTION TO ADDRESS THE SIX SEPARATE BRANCHES
The Tribunal declined jurisdiction to make an order in respect of the Six Separate Branches primarily because the Superintendent's Notice of Proposal regarding the wind ups related to the Insolvent Branches did not address the Six Separate Branches in any way.
The Tribunal also held that they could not rely upon section 89(9) of the PBA to assume jurisdiction to make an order, as that provision requires the subject matter to be closely related to the Superintendent's proposal that is before the Tribunal. The Tribunal held that the issue of the solvency deficiency in relation to the Six Separate Branches’ employees was not closely related to who was required to fund the wind up deficits related to the Insolvent Branches. In addition to the fact that the Six Separate Branches were not the subject of the Notice of Proposal, the Tribunal noted that the circumstances regarding the withdrawal of the Six Separate Branches were different than those of the Insolvent Branches. The Tribunal also noted that who the “employer” was for the purposes of the PBA could differ depending on the facts of each case and that the funding obligations of an ongoing plan are different than the obligations for a wound up plan (or part thereof).
VON WAS NOT THE “EMPLOYER”
With respect to the merits of the case, the Tribunal found that the issue was completely determined based on the statutory definition of “employer” under the PBA. The PBA defines “employer” as follows:
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“employer”, in relation to a member or a former member of a pension plan, means the person or persons from whom or the organization from which the member or former member receives or received remuneration to which the pension plan is related. …
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The Tribunal found that the definition of “employer” in the PBA was not ambiguous and clearly stated that the employer was the entity who pays the remuneration to which a pension plan relates. Based on the evidence, the Tribunal held that VON was not the employer of the Insolvent Branches' employees as VON did not provide any remuneration to those employees. The Insolvent Branches paid remuneration to their own employees.
The Tribunal dismissed arguments that the definition of employer under the PBA contemplated a broader meaning to the term “employer”. The Tribunal also disregarded the previous decision of the Tribunal in Dustbane Enterprises Limited and Superintendent of Financial Services (Ontario) (2001), 27 C.C.P.B. 1, (F.S. Trib.), aff’d [2002] O.J. No. 2943 (Div. Ct.), (which was relied upon by the Six Separate Branches), in which the question of who paid the members of the pension plan was not held to be the determinative factor.
The Tribunal also dismissed arguments by the Six Separate Branches that the PBA contemplates that there is a “controlling employer” in a single employer pension plan that has more than one employer. The Tribunal agreed with the VON that the PBA clearly contemplated that some single employer plans could have more than one employer without constituting a MEPP under the PBA. The Tribunal found this was evidenced by section 86(1) of the PBA, regarding payments to the PBGF and the Superintendent’s ability to place a lien on the assets of the employer or employers. With respect to the concept of a “controlling employer”, the Tribunal specifically noted that the fact that the VON wound up the Plan in relation to the Insolvent Branches, "under the mistaken impression that declaring the Partial Wind Ups was part of its role as Plan administrator" did not mean that the VON was the controlling employer. Instead, the Tribunal agreed that VON was exercising its power to amend the Plan as the administrator.
The Tribunal also rejected the Superintendent's argument that the principle of contra proferentum should apply to interpret the terms of the Plan against the VON. The Superintendent had argued that any ambiguity in the funding provisions of the Plan should be interpreted against VON. However, the Tribunal stated that the parties could not contract out of the funding provisions of the PBA and the PBA provided the complete answer as to which parties were responsible for funding the Plan.
NO JOINT AND SEVERAL LIABILITY
Finally, the Tribunal rejected the arguments by the Superintendent and the unions that “employer” could be interpreted to mean all participating employers jointly and severally. Under this interpretation, if a participating employer of a pension plan was in bankruptcy and could not fund, the remaining employers would be jointly and severally liable to fund the deficit in respect of the bankrupt employer’s employees. The Tribunal found that there was no statutory authority for such an interpretation and if it was the intention of the legislature to attach funding liability to all participating employers of a pension plan, they could have easily expressed such an intention. The Tribunal noted that accepting this interpretation of “employer” would permit the Superintendent to “cherry pick” amongst participating employers of a pension plan as to which employers were responsible for funding. The Tribunal held that this was not reasonable.
Based on these reasons, the Tribunal held that the VON is not an “employer” under the PBA for the purpose of funding obligations related to Insolvent Branch employees. On that basis, the Tribunal ordered that (i) VON is not responsible for funding any obligations under the PBA with respect to the partial wind ups of the Insolvent Branches; (ii) the Superintendent is required to proceed with a review of the partial wind up reports as quickly as possible; and (iii) the Superintendent is required to make a finding as to the application of the PBGF to the partial wind ups and to the related benefits of the affected employees.
POTENTIAL IMPACT OF THE DECISION
The Tribunal’s decision provides some guidance with respect to which entities are responsible for funding wind up deficits in pension plans with more than one employer. The decision is also positive for employers, as the Tribunal clearly rejected an interpretation of “employer” that would make participating employers jointly and severally liable for funding deficits in respect of all plan members, regardless of who actually was the members’ employer.. Therefore, it is clear that when a participating employer withdraws from a pension plan (other than a MEPP), the remaining employers are not responsible for funding any wind up deficit associated with the withdrawing employer’s employees.
By adopting a narrow definition of “employer”, based only on who remunerated the employees, the decision raises issues with respect to the degree to which employers participating in a pension plan can structure their affairs to immunize themselves from potential funding obligations. For example, could multiple employers arrange for all employees to receive remuneration through one corporate entity and take the position that this corporate entity was the only “employer” for purposes of funding the plan?
At the time of publication, no information was available as to whether any of the parties will seek to appeal the Tribunal’s decision through judicial review. If you have any questions regarding this decision, please contact Susan Nickerson at 416.864.7257, Ian Dick at 416.864.7334 or Natasha Monkman at 416.864.7302 who represented the Six Separate Branches in this case.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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CRITICAL INJURY OR FATALITY OF A NON-WORKER: TO REPORT OR NOT TO REPORT?
A guest drowns in the hotel pool. Does the hotel need to report the fatality to the Ministry of Labour under subsection 51(1) of the Occupational Health and Safety Act (“OHSA”)? According to a recent decision by the Ontario Labour Relations Board, the answer is “yes”. The Labour Board found that employers and contractors are required to report a critical injury or fatality suffered by a non-worker to the Ministry of Labour if it occurs at a place where workers work. The Labour Board found that this obligation to report applies regardless of whether a worker is present at the time of the injury.
In the case before the Labour Board, a guest of Blue Mountain Resorts drowned in a swimming pool on December 24, 2007. On March 27, 2008, a Ministry of Labour Health and Safety Inspector ordered Blue Mountain to report the fatality and to provide related reports. Blue Mountain appealed the Order to the Labour Board.
At issue before the Labour Board was the interpretation of subsection 51(1) of OHSA, which provides as follows:
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Where a person is killed or critically injured from any cause at a workplace, the constructor, if any, and the employer shall notify an inspector, and the committee, health and safety representative and trade union, if any, immediately of the occurrence by telephone, telegram or other direct means and the employer shall, within forty-eight hours after the occurrence, send to a Director a written report of the circumstances of the occurrence containing such information and particulars as the regulations prescribe. (emphasis added)
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EMPLOYER’S ARGUMENT
Before the Labour Board, Blue Mountain argued that the requirement to report a critical injury or fatality under subsection 51(1) of OHSA did not apply because the incident did not involve a worker and did not occur at a workplace. It argued that a workplace has to mean a place where workers are present.
Blue Mountain also argued that the broader implications of interpreting subsection 51(1) of OHSA to require the reporting of all incidents involving non-workers are problematic. To require Blue Mountain to report critical injuries of non-workers would mean that it would have to report incidents involving ski guests who suffer a broken leg or arm on the ski hill. Further, Blue Mountain argued that it would then be required under subsection 51(2) of OHSA not to disturb the accident scene. For example, it would have to barricade a ski run where a ski guest breaks a bone until such time as the Ministry of Labour was notified and a Health and Safety Inspector authorized the release of the scene.
MINISTRY OF LABOUR’S ARGUMENT
The Ministry of Labour argued that OHSA must be given a broad and liberal interpretation. Subsection 51(1) of the Act uses the word “person”, not “worker”; therefore, the section requires the reporting of all critical or fatal incidents at the workplace.
Further, the Ministry of Labour argued that workers are vulnerable to the same hazards and risks as non-workers who attend at a workplace. The reporting of a non-worker injury serves to enable the Ministry of Labour to conduct an investigation and make orders for the protection of workers who may attend at the workplace.
LABOUR BOARD’S DECISION
The Labour Board accepted the Ministry of Labour’s argument and found:
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…where workers are vulnerable to the same hazards and risks as non-workers who attend a workplace, it is not an absurd result for an employer to be required to report when a non-worker suffers a critical injury at a workplace …
If the goal is to enhance worker safety by alerting the Ministry to hazards in the workplace that could affect workers, a provision that requires the reporting of critical injuries suffered by non-workers in places where workers work, regardless of whether a worker was present at the time and place of the critical injury, is not absurd.
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The fact that a worker could have been affected by a potential hazard was a significant factor in the Board’s analysis. The Board upheld the Inspector’s Order requiring Blue Mountain to report the drowning death of a hotel guest.
WHAT EMPLOYERS NEED TO KNOW
In the Blue Mountain decision, the Labour Board interpreted OHSA broadly, particularly in its interpretation of what is a “workplace”. The decision risks turning every place into a workplace, all of the time, regardless of the circumstances. If a snow plough operator is in the vicinity of an accident where a pedestrian is critically injured by a motorist, is this a reportable accident under OHSA? Or a patient slips and falls breaking his or her leg in a hospital, is this a reportable accident under OHSA? The answer is “maybe”. It will depend on all the circumstances, including whether a worker could be affected by a potential hazard.
In light of this decision, employers must carefully consider reporting critical injuries and fatalities involving workers or non-workers (e.g. patients, customers, guests and members of the public) alike to the Ministry of Labour or risk liability under OHSA.
In addition to reporting the accident, employers must be aware of subsection 51(2) of OHSA which requires an accident scene NOT to be disturbed until authorized by the Ministry of Labour Inspector. Subsection 51(2) provides:
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Where a person is killed or is critically injured at a workplace, no person shall, except for the purpose of,
(a) saving life or relieving human suffering;
(b) maintaining an essential public utility service or a public transportation system; or
(c) preventing unnecessary damage to equipment or other property,
interfere with, disturb, destroy, alter or carry away any wreckage, article or thing at the scene of or connected with the occurrence until permission so to do has been given by an inspector.
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In the Blue Mountain decision, the Labour Board declined to comment directly on an employer’s obligations under subsection 51(2) if a non-worker is injured. Usually, employers tape-off or barricade an area until the Ministry of Labour completes its investigation. This requirement may be problematic if it applies to workplaces that are frequently accessed by non-workers such as health and long-term care facilities, resorts, hotels, sports arenas, restaurants and municipal streets.
For more information on how to handle Ministry investigations, refer to the Resource Centre section of our website and the March 11, 2009 news item “Accident Investigations”.
For more information about your Health and Safety obligations, please contact Meghan Ferguson (Toronto) at 416.864.7350, Scott Thompson (Toronto) at 416.864.7283 or Robert Little (Toronto) at 416.864.7332.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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SOLVENCY FUNDING RELIEF IS HERE
This week saw the culmination of many months of work by the Ontario and Federal Governments with respect to solvency funding relief measures. As of yesterday, June 24, 2009, both sets of solvency funding relief regulations have been enacted. The new regulations attempt to balance the goals of maintaining benefit security for employees and retirees, and preserving the financial condition of corporations. This is accomplished by reducing contributions for pension solvency deficits to allow more resources to be put toward operations. The solvency relief measures included in both the Ontario and Federal Regulations provide a number of options to plan sponsors in respect of solvency deficiencies in recognition of the fact that each sponsor may have different priorities and restrictions. Plan sponsors now have a number of options available and will need to consider the disclosure, communication, and filing requirements associated with each of the options.
ONTARIO ENACTS SOLVENCY RELIEF PROVISIONS
The Ontario Government has enacted the long awaited amendments to the Pension Benefits Act Regulations (the “Regulations”) providing solvency funding relief to sponsors of defined benefit pension plans. Under the amendments to the Regulations, the administrator of an eligible plan may choose one or more of three funding options in the first filed valuation report with a valuation date between September 30, 2008 and September 29, 2011 (the “solvency relief report”).
APPLICATION
The relief is available as a one time election and if a plan administrator does not elect a relief option when the solvency relief report is filed, the plan administrator will not be permitted to make a relief election at a later date. For solvency relief reports with valuation dates between September 30, 2008 and November 1, 2008, the Regulations have been amended to extend the timeline for filing a valuation report from 9 to 10 months. If an administrator has already filed a report with a valuation date between September 30, 2008 and November 1, 2008, the administrator can refile the report and make an election upon the subsequent refiling.
THE RELIEF OPTIONS
When filing a solvency relief report with a valuation date between September 30, 2008 and September 29, 2011, a plan administrator for an Ontario-registered defined benefit pension plan may elect to take advantage of one or more of the following three options:
- Defer, up to one year, the start of special payments required to liquidate any new going concern unfunded liability or new solvency deficiency determined in the solvency relief report. Jointly Sponsored Pension Plans (“JSPPs”) are not permitted to elect Option 1.
- Consolidate special payments for pre-existing solvency deficiencies into a new five-year payment schedule that starts on the valuation date of the solvency relief report.
- With the consent of members and former members, extend the period for liquidating the new solvency deficiency from 5 years to a maximum of 10 years. The consent requirements do not apply to jointly governed plans such as multi-employer pension plans (which have member representation on the Board or Committee administering the plan).
A plan administrator can elect to combine the effects of the three relief options. Each option has varying rules and requirements that will be discussed in more detail below. Of particular note, Option 1 and Option 2 do not require the consent of members and former members. Option 3, on the other hand, can only be accessed with the consent of members and former members.
In all cases, any actuarial gains in future solvency valuations may be used to reduce or eliminate any solvency special payments determined in the solvency relief report. Gains cannot be used to reduce or eliminate special payments if no relief option is elected. In that case, they can only be used to reduce the amortization period.
OPTION 1 - DEFERRAL OF THE START OF NEW SPECIAL PAYMENTS
Plan administrators can elect to defer, up to one year, the start of special payments required to liquidate any new going concern unfunded liability or new solvency deficiency determined in the solvency relief report. This option is not available to excluded plans, which includes plans that are not up to date with their current special payments, plans that are qualified as Specified Ontario Multi-Employer Pension Plans, plans that are established after September 29, 2008 (unless established due to a merger or a split of existing plans), as well as certain other pension plans. JSPPs are also excluded from electing Option 1.
If a plan administrator elects Option 1, special payments in respect of new solvency deficiencies or new unfunded liabilities may be deferred for 12 months from the valuation date. Therefore, if a solvency relief report has a valuation date of December 31, 2008, no special payments are required to be made in respect of new deficiencies revealed in the report until December 31, 2009. Originally, the Ontario Government announced that only the “catch up” payments in respect of the period between the valuation date and the filing of the report would be deferred. The final version of the Regulations provides more relief by deferring the start date for new special payments altogether.
Plan administrators are not required to obtain the consent of members or former members in order to elect Option 1. However, within 60 days of the start of special payments required under the solvency relief report, the plan administrator must provide enhanced notice to the eligible members and eligible former members. An eligible member is considered a member whose pension benefit includes a defined benefit, other than those members who have transferred their entitlements out of the plan or have died prior to the date the notice is sent. Similarly, an eligible former member is a former member whose pension or pension benefit includes a defined benefit, other than, those former members who have transferred their entitlements out of the plan or have died prior to the date the notice is sent. It is important to note that members’ spouses and beneficiaries do not have entitlements to receive notice nor is their consent required in order to extend the amortization period.
The enhanced notice must contain the following information:
- a description of the option or options that have been elected;
- the transfer ratio of the pension plan at the valuation date;
- the estimated annual contributions that would have to be made if no election was made;
- the estimated annual contributions that will be made as a result of the election; and
- an explanation as to how benefit security may be affected as a result of the election.
OPTION 2 - CONSOLIDATION OF EXISTING SOLVENCY DEFICIENCIES INTO A NEW FIVE-YEAR PAYMENT SCHEDULE
Plan administrators may also elect to consolidate special payments for pre-existing solvency deficiencies into a new five-year payment schedule that starts on the valuation date of the solvency relief report. This option is not available to the excluded plans listed above.
To the extent that the solvency special payments have been made between the valuation date and the filing date and exceed those special payments that would be required under the solvency relief report as a result of electing Option 2, the excess can be used to reduce subsequent contributions made up to the date at which the next actuarial report is filed.
When Option 2 is elected, there are conditions on the ability to amend the pension plan. If the plan is amended to increase pension benefits or ancillary benefits, any resulting increase in the going concern unfunded liability must be liquidated over five years, beginning on the valuation date of the actuarial report in which the increase in the going concern unfunded liability was determined. This accelerated funding requirement for the going concern unfunded liability remains in effect until the consolidated prior solvency deficiency has been fully liquidated by payments over the new five year amortization schedule.
As with Option 1, no member or former member consent is required. However, within 60 days of the start of special payments required under the solvency relief report, the plan administrator must provide the enhanced notice to the eligible members and eligible former members containing the same information as set out above.
OPTION 3 - EXTENSION OF AMORTIZATION SCHEDULES BY UP TO FIVE YEARS FOR NEW SOLVENCY DEFICIENCIES
Option 3 will permit the extension of the period for funding any new solvency deficiency from 5 to a maximum of 10 years, with the consensus of eligible members and former members. Option 3 is not available to the excluded plans listed above. As with Option 2, if a plan administrator elects to extend the amortization period for a new solvency deficiency, there will be conditions on the ability to amend the pension plan. If the plan is amended to increase pension benefits or ancillary benefits, any resulting increase in the going concern unfunded liability must be liquidated over five years, beginning on the valuation date of the actuarial report in which the increase to the going concern unfunded liability was determined. The accelerated going concern funding requirement applies for plan amendments that become effective before the end of the fifth year of the extended amortization schedule. Amendments can be made in the later years of the amortization schedule without attracting this condition.
THE CONSENT PROCESS
In order to access relief under Option 3, a plan administrator must obtain the requisite level of consent from eligible members and eligible former members, which is deemed to be obtained where no more than one third of the eligible members and eligible former members object to the election. Where a bargaining agent represents some or all of the eligible members, it is the bargaining agent’s consent that must be obtained for those members. Notably, bargaining agents are not permitted to consent or object on behalf of eligible former members. However, if an eligible member retires between the valuation date of the solvency relief report and the date the information forms are sent to members, the bargaining agent may continue to represent those individuals for the purpose of determining consent.
All eligible members who are not represented by a collective bargaining agent, all former members and all bargaining agents must also be provided with Notices of Objection that they may complete and return if they wish to object to the funding of the plan in accordance with this relief option. Bargaining agents must respond on behalf of their eligible members within 45 days. Members can have no less than 45 days to respond from the date the information form is sent by the administrator. If less than one third of the eligible member and former members object, the Regulations will deem consent to be obtained and the plan may be funded in accordance with Option 3.
All eligible members, eligible former members and bargaining agents must then be provided with enhanced notice in the form of an information statement containing specific information required by the amended Regulations. In addition to the information required to be provided in the enhanced notice under Options 1 or 2, members, former members and bargaining agents must also be informed of their right to object to the election for Option 3. If there is a collective bargaining agent, members and former members must also be informed if the union has objected or chosen not to object on behalf of the members it represents and that if the union objected, that the objection does not represent objections on behalf of more than one third of the aggregate number of members and former members.
PROGRESS REPORT
If the plan administrator obtains the required consent and begins funding the pension plan in accordance with Option 3, the plan administrator must provide members and former members with an annual progress report. The progress report must update members and former members regarding the transfer ratio of the pension plan, the required contributions to be made according to the solvency relief report and provide explanations of how the benefits of the members and former members may be affected as a result of funding in accordance with Option 3. For eligible members, the progress report may be included in the annual statement, but plan administrators will be required to create and send the updates to former members as well.
OTHER CHANGES TO THE ONTARIO REGULATIONS
In addition to the establishment of the three solvency funding relief options, the Regulations have also been amended to address the use of the new commuted value standards, new rules regarding contribution holidays, transfer ratios, and locked in accounts. This update summarizes the changes to commuted value standards and transfer ratios as they will be of interest to plan sponsors facing solvency funding concerns.
COMMUTED VALUE STANDARDS
The Regulations have been amended to confirm that the revised Standard of Practice for Pension Commuted Values (Section 3800) published by the Canadian Institute of Actuaries, which took effect April 1, 2009, may be used for the purpose of a solvency valuation with a valuation date on or after December 12, 2008. However, the revised standards cannot be used to determine commuted values for individuals prior to April 1, 2009.
CHANGES REGARDING TRANSFER RATIOS
The Regulations have also been amended to restrict the payment of commuted values where the transfer ratio is less than one. The prior approval of the Superintendent must now be obtained to transfer any part of the commuted value where the transfer ratio is less than one and the administrator knows or ought to know that, since the last valuation report, the transfer ratio has declined by 10 per cent or more.
FEDERAL PENSION FUNDING RELIEF MEASURES NOW IN EFFECT
On June 12, 2009, the Federal Government announced the coming into force of the Solvency Funding Relief Regulations, 2009 (the “Federal Regulations”) that provide temporary solvency funding relief for federally regulated defined benefit pension plans. The regulations, which were published in the Canada Gazette on June 24, 2009, are now in effect and have been revised in a number of respects from the draft regulations published in April.
Federally regulated pension plans account for approximately 7% of private pension plans in Canada and are governed by the Pension Benefits Standards Act (“PBSA”) and regulations thereunder. The Federal pension legislation and these new regulations relate primarily to companies operating in the inter-provincial transportation, banking and telecommunication industries. In 2006, the Federal Government was one of the first Canadian jurisdictions to introduce pension funding relief for defined benefit pension plans. The 2006 regulations provided funding relief in respect of solvency deficiencies identified in valuation reports prepared up to January 1, 2008. Approximately 75 federally regulated pension plans took advantage of the funding relief made available during this period.
APPLICATION OF THE FEDERAL REGULATIONS
The new Federal Regulations apply to new solvency deficiencies reported in the first actuarial valuation report filed after June 12, 2009 with a valuation date between November 1, 2008 and October 31, 2009. The Office of the Superintendent of Financial Institutions (“OSFI”) recently announced that filing of actuarial reports that would otherwise be required to be filed by June 30, 2009 may be delayed until August 14, 2009 in order to allow for the preparation of reports which take in account the funding relief initiatives introduced in the new regulations. In addition, OSFI announced that actuarial reports not required to be filed, but that are voluntarily filed to take advantage of the new regulations, may be filed in respect of a plan year end between November 1, 2008 and October 31, 2009, by December 31, 2009 or 9 months after the plan year end.
As with the Ontario Regulations, the new Federal Regulations also provide plan sponsors with a number of options to address solvency deficiencies.
OPTION 1 - EXTENSION OF SOLVENCY PAYMENT PERIOD BY ONE YEAR
The new Federal Regulations permit solvency funding using a 10 year amortization schedule without member consent and without posting a letter of credit for the first year after filing the valuation. For example, for plans using a December 31st valuation date, the 10 year amortization schedule applies to the year January 1, 2009 to December 31, 2009. After that time, if solvency funding is to continue using a 10 year amortization schedule, member and former member consultation and consent or a letter of credit is required to be posted, both as described below. Where a plan sponsor chooses, or is not able to take advantage of, the 10 year amortization schedule after the first year, a new 5 year period (starting at the end of the first year) is established to make the remaining special payments toward the 2008 solvency deficiency. Therefore, at a minimum, the new regulations allow for solvency special payments to be reduced for the first year for all federally regulated pension plans along with a deferral of the remaining payments. In order to benefit from this funding relief, there cannot be any outstanding payments due to the pension plan as of the date of filing of the actuarial report.
OPTION 2 - EXTENSION OF SOLVENCY PAYMENT FUNDING PERIOD TO 10 YEARS BEYOND 2009
The Federal Regulations provide that the 2008 solvency deficiency can continue to be amortized and funded over 10 years after the 2009 year only if either:
less than one third of the members and less than one third of the non-member beneficiaries of the plan object by the end of the year, or
a letter of credit to cover the difference between the payments required under the usual 5 year and new 10 year amortization schedules is obtained.
As a condition of extending the amortization period with consent, the Federal Regulations provide that any amendments to improve benefits will be subject to restrictions in 2009 and for the first 5 years of the 10 year amortization period.
A. MEMBER AND BENEFICIARY SUPPORT
In order to extend the 10 year amortization schedule beyond the first year, one option is to seek the support of members, retirees and other beneficiaries. The procedure described in the Federal Regulations involves the administrator of the plan providing information about the plan’s funded status, the difference in the amount of the special payments to be made to the plan, the difference in benefits if the plan were to be terminated, the restriction on benefit improvements and the potential consequences of funding over the extended period to all members (or where unionized, to the trade union with bargaining rights) and other beneficiaries (primarily retirees, deferred vested members and surviving spouses). After providing at least 30 days for members, trade unions, and other beneficiaries to consider the proposal, if less than one third of the active members and less than one third of the other beneficiaries do not object, the proposal can be put into effect.
In order to take advantage of funding over a 10 year amortization schedule, the plan administrator is required to make a filing with OSFI within 60 days of the year end of the 2009 plan year. The filing is to include confirmation that corporate authorization to adopt a 10 year amortization schedule has been obtained in the form of a resolution of the board of directors, a statement certifying the disclosure to members and beneficiaries has taken place, and a statement confirming that the requisite level of consensus was obtained in that process.
Since the beneficiary consent requirement is independent of the active member consent requirement under the Federal Regulations, there is a need to satisfy the concerns of retirees as well as the concerns of active employees. Obtaining the consent of the beneficiary group may be more difficult given the different objectives of the two stakeholder groups and the lower importance that retired and terminated members may attach to the sponsor’s desire to direct funding from the pension plan to sustaining current business operations.
B. LETTER OF CREDIT
Plan sponsors will have the option to fund the 2008 solvency deficiency over a 10 year period without the consent of members and beneficiaries as described above, if the sponsor obtains a letter of credit for the differential between the payments required by adopting a 5 year versus a 10 year amortization schedule. The 2006 regulations required that the issuer of the letter of credit be given an acceptable rating by one rating agency. The requirement under the Federal Regulations is that the issuer must have acceptable ratings by two rating agencies.
Should the plan sponsor “default” (for example, terminate the plan, become bankrupt or file for protection under the Companies’ Creditors Arrangement Act during the relief period), the trustee of the plan would make a demand for payment from the financial institution issuing the letter of credit and the face value of the letter of credit must be paid into the pension fund. The letter of credit would also be payable on the demand of the trustee if the letter of credit is not renewed or replaced on its expiry date. If the financial position of the pension plan improves due to changes in the economy, plan sponsors will be able to reduce or eliminate the letters of credit to the extent that they are no longer required.
OPTION 3 - ASSET SMOOTHING AND DEEMED TRUST
In addition to providing for direct solvency funding relief, the Federal Regulations provide some relief in the valuation of assets in turbulent market conditions. Typically, actuarial reports filed under the PBSA Regulations are permitted to value the pension assets using an asset smoothing methodology over no more than a five year term to stabilize short-term fluctuations in the market values of pension assets. If an asset smoothing method is used, the resulting asset value cannot exceed 110% of the actual market value of assets on the date of the report.
Where a pension plan is using one of the above solvency relief measures, an actuarial report prepared as of a date between November 1, 2008 and October 31, 2009 may use an asset smoothing method with a cap of 115%, rather than 110% of the actual market value of pension assets on that date. This leeway is only granted for the purposes of calculating funding obligations under the new solvency relief measures. An actuarial report prepared on this basis is required to disclose the special payments that would have been required if the actuarial report had been prepared in accordance with the PBSA General Regulations. Additionally, all other requirements of the PBSA tied to the solvency ratio of a pension plan are required to be calculated in accordance with the PBSA General Regulations and cannot take into account the additional leeway for asset smoothing.
The difference between the special payments required to be made under the PBSA Regulations using a 110% smoothing maximum and the amounts required to be paid using an asset smoothing methodology up to 115% will now be subject to a deemed trust and are required to be funded in the event of a default. Notably, the draft regulations published in April provided for the deemed trust provisions to apply more extensively to the difference between 5 year and 10 year special payment requirements described under Option 2 and now only are to apply in the event of adopting a 115% asset smoothing methodology.
FURTHER DETAILS
From an implementation perspective, if the 10 year funding schedule described in Option 2 is to be used, notice and the actuarial valuation is required to be filed with the Superintendent along with a form to be developed by OSFI. Different provisions apply to Crown corporations and multi-employer pension plans which have not been summarized here.
CONSIDERATIONS GOING FORWARD
With the enactment of the solvency funding relief regulations in Ontario and at the Federal level, plan sponsors and administrators must now start the process of selecting the appropriate options for their situation. Where this will require the consent of members, former members and unions, communications will be very important. In particular, both solvency relief programs require plan sponsors to engage their collective bargaining agents as trade unions are empowered to object on behalf of their members.
Under both the Ontario and Federal Regulations, any objection to a 10 year amortization proposal by a trade union is considered to be an objection on behalf of all plan members in that bargaining unit. The consensus conditions contained in both sets of regulations will make it very difficult to obtain relief beyond the first year window without the consent of trade unions. Plan sponsors considering making a proposal to adopt the 10 year amortization schedule will want to begin planning how to communicate with bargaining agents and other members, including making a determination as to whether the scope of the disclosure required by the regulations is likely to be sufficient to obtain consensus. If not, consideration should be given to what further information may be necessary to both assist members and their bargaining agents to understand the funding requirements under the legislation and to allow them to understand the reasons why relief is necessary for the plan sponsor. This may require providing financial or planning forecasts to explain how the corporation and its employees may benefit from the funding relief. If pension funding has not before been the subject of union negotiations, additional consideration about the scope and conditions of providing this information may be necessary.
If you are considering taking advantage of any of the solvency relief options enacted by the Ontario or Federal Governments, the members of Hicks Morley’s Pension & Benefits Practice Group would be pleased to assist. If you have any questions regarding the options available or the communications that will be required, please contact a member of our Group.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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COURT DISMISSES MOTION TO CERTIFY CLASS ACTION FOR OVERTIME WAGES
On June 18, 2009, Madam Justice Lax of the Ontario Superior Court of Justice released her decision, in which she dismissed the motion for certification of a proposed class action brought by Dara Fresco on behalf of current and former employees in the retail branches of the Canadian Imperial Bank of Commerce (“CIBC”) with respect to her claim alleging unpaid overtime wages (Fresco v. Canadian Imperial Bank of Commerce). CIBC was represented by Hicks Morley and Torys. Justice Lax found that the Plaintiff failed to meet the test under the Class Proceedings Act (the “CPA”) in Section 5(1)(c), as the action lacked the essential element of commonality in order to be certified as a class action.
The Plaintiff framed her claim in breach of contract and unjust enrichment. Central to these claims was her allegation that CIBC’s Overtime Policy was illegal and that it violated the statutory requirements under the Canada Labour Code (the “CLC”). The Plaintiff also alleged that the provision of time in lieu to CIBC’s employees, as an option under CIBC’s Overtime Policy was not permitted under the CLC. Justice Lax noted that the cornerstone of the Plaintiff’s claim was the alleged illegality of the CIBC Overtime Policy, and, in particular, the pre-approval requirement.
Justice Lax found that CIBC’s Overtime Policy was not illegal and, at any rate, the determination of its legality would not materially advance any class member’s claim for unpaid overtime wages. Justice Lax went on to find that:
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Section 174 [of the CLC] permits employees to exceed the maximum hour thresholds only where the employer has required or permitted the overtime work. The very language of the CLC therefore contemplates the right to pre-approve overtime. In order to “require or permit” an employee to work overtime, management must be directly involved in deciding whether the employee works overtime. Indeed, a pre-approval requirement is a way to ensure that an employer complies with s. 171 of the CLC, which states that the total hours worked by an employee in any week shall not exceed 48 hours.
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Justice Lax also noted that “Leaving aside the statutory framework, it is the fundamental right of the employer to control its business, including employees’ schedules, hours of work and overtime hours”. Justice Lax went on to conclude that it was plain and obvious that the pre-approval requirement in CIBC’s Overtime Policy was not unlawful on its face.
Justice Lax also reviewed the provision of time in lieu at the rate of time and a half as an option available to the employee under CIBC’s Overtime Policy and rejected the Plaintiff’s claim that the provision of time in lieu was illegal. Justice Lax concluded that it was plain and obvious that the time in lieu provision in CIBC’s Overtime Policy is lawful and complies with the CLC. The CIBC Overtime Policy offered a more favourable benefit than that under the CLC, as it offered employees a choice between wages at time and a half and time in lieu at time and a half. (CIBC’s Overtime Policy also provided a more favourable lower total weekly threshold of 37.5 hours for the triggering of overtime, rather than 40 hours under the CLC.)
Justice Lax found that the Plaintiff had failed to establish an evidentiary foundation to support her allegation that a common, pervasive or systemic practice of unpaid overtime existed at CIBC. Justice Lax further held that, even if there were such an evidentiary foundation, the case was not one which could be advanced by a class action because any issues of systemic wrongdoing could not be resolved without an examination of the individual claims.
Justice Lax held that the test for commonality under Section 5(1)(c) of the CPA was not met as there was no asserted common issue capable of being determined on a class-wide basis that would sufficiently advance the litigation to justify certification.
This case illustrates the complex and uniquely challenging nature of class action litigation in the employment context.
Hicks Morley’s team was led by John Field and comprised of Lauri Wall, Elisha Jamieson and Kathryn Bird. If you have any questions arising from this FTR Now, please contact John Field at 416.864.7301.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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LEGISLATIVE UPDATE
This Update follows the progress of a selection of recent Ontario and federal legislation, proposed legislation and legislative reform initiatives related to human resources law and advocacy, to the middle of June 2009. New items and changes to the status of existing items are indicated by the notation ">>".
Ontario Legislation
The Legislature has adjourned until September 14, 2009.
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Recent Legislation and Proclamations
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Bill 162, Budget Measures Act, 2009 – This Bill implements the terms of the Budget announced by the Government on March 26, 2009. Among the highlights of the Budget are:
- solvency funding relief for Ontario pension plan sponsors;
- comprehensive pension reform proposals;
- phased retirement;
- the creation of authorized subsidiaries by the Administration Corporation under OMERS;
- division of pensions on marriage breakdown; and
- facilitating pension compromises during corporate restructurings.
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Bill 162 received Royal Assent on June 5, 2009. The Bill should be consulted directly for coming into force information
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Bill 157, Education Amendment Act (Keeping Our Kids Safe at School), 2009 – This Bill will require school staff to report serious student incidents, such as bullying, to the principal of the school. It would also require that the principal contact the parents of the victim if the principal believes that the pupil has been harmed. Amongst other matters, the Bill will also establish a requirement for school staff to respond to and address inappropriate, disrespectful behaviour among students. The Bill also permits the Minister and Boards to establish policies and guidelines.
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Bill 157 received Royal Assent on June 5, 2009. It will come into force on February 1, 2010.
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Bill 154, Employment Standards Amendment Act (Organ Donor Leave) 2009 – This Bill establishes a new ESA leave of absence for organ donors (kidney, liver, lung, pancreas, small bowel) of up to 13 weeks (which can be extended by a further 13 weeks). The leave will enjoy the same general protections afforded to other ESA leaves.
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Bill 154 received Royal Assent on June 5, 2009. It will come into force on proclamation.
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Bill 139, Employment Standards Amendment Act (Temporary Help Agencies), 2009 – This Bill amends the Employment Standards Act, 2000 to create a new Part applicable to temporary help agencies, employees of temporary help agencies and clients of the agencies. The Bill is being accompanied by regulatory changes that will eliminate exemptions for “elect to work” employees from public holiday pay, termination pay and severance pay.
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Bill 139 received Royal Assent on May 6, 2009. It will come into force on November 6, 2009.
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Bill 133, Family Statute Law Amendment Act, 2009 – This Bill makes a number of changes to family law matters. Of interest to employers, the Bill would clarify the treatment of pensions in family law disputes. The most notable change to be effected by Bill 133 is the introduction of a scheme of immediate settlement, under which a plan member’s former spouse can immediately receive his or her share of the member’s pension.
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Bill 133 received Royal Assent on May 14, 2009. While much of the Bill is already in force, most of the sections related to the treatment of pensions in family law disputes will come into force on proclamation.
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Bill 118, Countering Distracted Driving and Promoting Green Transportation Act, 2009 – This Bill amends the Highway Traffic Act to prohibit an individual from driving if the display screen of a television, computer or other device in the vehicle is visible to the driver. It would also prohibit the holding or use of hand-held wireless communication devices and electronic entertainment devices. The Bill incorporates a number of exceptions to these basic prohibitions.
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Bill 118 received Royal Assent on April 23, 2009. The sections relating to the new prohibitions will come into force upon proclamation.
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Bill 108, Apology Act, 2009 – This Bill implements new “apology” legislation. The purpose of the Bill is to ensure that an apology made by or on behalf of any person in relation to any matter would not be considered an admission of liability or fault, and would not affect any insurance coverage available to a person in relation to the matter, subject to a number of exceptions.
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Bill 108 received Royal Assent on April 23, 2009, and came into force on that day.
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Proposed Legislation
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Government Bills
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Bill 183 – Ontario College of Trades and Apprenticeship Act, 2009 – According to the “Explanatory Note” provided by the government, the purpose of this Bill is to “set out a scheme for the governance of the practice of trades in Ontario through the establishment of the Ontario College of Trades and through revising the current framework of apprenticeship training and certification contained in the Apprenticeship and Certification Act, 1998 and the Trades Qualification and Apprenticeship Act.” The Bill is very detailed, and should be consulted for specifics.
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Bill 183 was introduced at First Reading on May 13, 2009. It received Second Reading on June 3rd, and has been referred to the Standing Committee on Justice Policy.
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Bill 177 – Student Achievement and School Board Governance Act, 2009 – The purpose of this Bill is to address various matters relating to the governance of school boards, including establishing the responsibilities of boards for student achievement and stewardship of resources. The Bill would set out duties of the chair and other members of a board. The Bill also includes a new purpose statement that sets out the purposes of education and a public school system. The Bill would also delete a number of “obsolete and inapplicable” provisions of the Education Act.
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Bill 177 was introduced at First Reading on May 7, 2009.
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Bill 175 – Ontario Labour Mobility Act, 2009 – This Bill is intended to implement Ontario’s obligations under the “Agreement on Internal Trade”, which is an agreement between the provinces and territories to remove labour mobility barriers within Canada. At its most basic, the Bill would permit certified workers in professions and skilled trades to move between jurisdictions or to choose to live in one province or territory, yet practise their occupation or trade in another (this includes certain residency restrictions imposed at the municipal level). The Bill would apply to a vast range of occupations, from lawyers and accountants to motor vehicle dealers to tradespersons under the Apprenticeship and Certification Act, 1998.
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Bill 175 was introduced at First Reading on May 5, 2009.
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Bill 168 – Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace), 2009 – This Bill would add a new Part to OHSA to address violence and harassment in the workplace. The new Part would require employers to develop policies with respect to workplace violence and harassment, and also to develop programs to implement the policies. Also of note, the amendments would define “workplace violence” with reference to physical injury only. Other aspects of the Bill that are of note include provisions relating to domestic violence, a requirement to assess the risk of workplace violence, a requirement to disclose persons with a history of violence (in limited situations) and a right to refuse work. For details on the Bill, please see our firm’s April 21, 2009 FTR Now, “Ontario Government Introduces Workplace Violence Legislation”, which can be found on the Resource Centre page of our website: www.hicksmorley.com.
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Bill 168 was introduced at First Reading on April 20, 2009.
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Private Members’ Bills
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Any Private Member of the Legislature may introduce a Private Member’s Public Bill (i.e. a Bill that would amend the general laws of the province). Historically, however, these Bills very rarely receive Third Reading and Royal Assent. We have listed below some current Private Members’ Public Bills of interest to employers that have progressed through the legislative process at least as far as the Committee Stage.
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Bill 165, Employment Standards Amendment Act (Protection for Artists), 2009 – This Bill would amend the ESA to provide that the definition of “employee” includes any person who is a dependent contractor and any artist who is an independent contractor. Corresponding changes would be made to the definition of “employer”.
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Bill 165 was introduced at First Reading on April 1, 2009. It received Second Reading on April 23rd, and has been referred to the Standing Committee on Regulations and Private Bills.
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Bill 6, Employment Standards Amendment Act (Wage Security), 2007 – The Bill would amend the Employment Standards Act, 2000 to establish the Employee Wage Security Program and provide for the appointment of a Program Administrator.
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Bill 6 was introduced at First Reading on December 4, 2007. It received Second Reading on December 6, 2007, and has been referred to the Standing Committee on General Government.
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Federal Legislation
Parliament is currently in session, and is expected to adjourn for the summer by no later than June 23rd.
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Recent Legislation and Proclamations
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None to report at this time.
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Proposed Legislation
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Government Bills
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Bill C-27, Electronic Commerce Protection Act – The federal government has introduced “anti-spam” legislation. Bill C-27 would enact the Electronic Commerce Protection Act, which would regulate such matters as unsolicited electronic messages, surreptitious installations of computer programs and the alteration of transmission data. Changes would be made to the Personal Information Protection and Electronic Documents Act to clarify that actual consent is needed for certain collections of e-mail addresses and for the collection of personal information by accessing a computer system without authorization (i.e. organizations cannot rely on any of the exemptions from consent set out in s. 7 of PIPEDA for these collections). Similar rules would be established for the use of such information.
The Bill would also create a civil cause of action that would allow individuals and businesses to claim damages against persons who violate the new Act or the new provisions of PIPEDA.
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Bill C-27 was introduced at First Reading on April 24, 2009. It received Second Reading on May 8th, and has been referred to the Standing Committee on Industry, Science and Technology.
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Regulations
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None to report at this time.
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The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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ACCESS AND PRODUCTION REQUIREMENTS AND RECORDS POSSESSED BY FACULTY MEMBERS
The Canadian Association of University Teachers recently published a memorandum about records in the possession of faculty members that raises some significant issues for Ontario universities.
In a memorandum dated April 8, 2009, and now published on the internet, the association states, “Based on collective agreements, memorandum of agreements, faculty handbooks and on past practice in our sector, it is CAUT’s position that virtually all records in the possession of academic staff are in the academic staff members’ custody or under their control, not in the custody or under the control of the institution.” CAUT makes an exception for records prepared in an official administrative capacity and records received in relation to official administrative duties, but states that personal notes or annotations on such records are not within a university’s custody or control.
There is no single correct response to the CAUT position. The question of custody or control of records is a highly record-specific and contextual question. Universities should therefore be cautious in agreeing to treat specific records or classes of records in certain ways if they engage in discussions with their associations based on the CAUT memorandum.
Universities should also consider the potential conflict between the CAUT position and their own legal obligations. The CAUT memorandum mentions the right of public access to information that is granted under freedom of information legislation. The “custody or control” concept in such legislation has been interpreted broadly by adjudicators and courts in order to promote public access to information. The privacy interests of individuals do not weigh against custody or control, but rather, are addressed through the application of an exemption for disclosures of information which would constitute an “unjustified invasion of privacy.” In the Ontario Freedom of Information and Protection of Privacy Act there is also an exclusion for records that are related to teaching and research that will apply to some records possessed by faculty members. Subject to these limitations, Ontario universities may be required by law to provide access to records in the possession of their faculty members notwithstanding the CAUT position.
If you have any questions about these matters please contact Dan Michaluk (Toronto) at 416.864.7253, Paul Broad (London) at 519.931.5604 or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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PENSION FUNDING IN CCAA RESTRUCTURING PROCEEDINGS
The pension plan funding difficulties of cash strapped companies have been the focus of significant media attention over the last few months. It is no surprise that two recent decisions of the Quebec Superior Court have gained considerable attention. This FTR Now looks at the AbitibiBowater proceedings and the court’s consideration of a company’s ability to change benefits set out in a collective agreement and pension funding obligations during CCAA restructuring proceedings.
AbitibiBowater Inc. and several related entities are currently in creditor protection pursuant to the Companies’ Creditors Arrangement Act (CCAA). The CCAA is bankrutpcy protection legislation, intended to provide a company with creditor protection while it seeks to restructure operations through a “stay of proceedings.” Shortly after entering CCAA protection, AbitibiBowater advised its union that it would not be implementing certain improvements to the pension plans which were to take effect on May 1, 2009. These improvements were agreed to by AbitibiBowater in a Memorandum of Agreement with the union, which was then incorporated into 18 collective agreements that remain in force. The company’s position was that the CCAA permitted this action, as it could not afford to fund the pension plan improvements The union challenged this decision by bringing a motion in the CCAA proceedings. The court found that neither the CCAA legislation nor the stay of proceedings granted by the court gave AbitibiBowater the authority to unilaterally modify its obligations under its collective agreements and declared the company’s actions null and illegal. The court’s decision is consistent with recently passed amendments to the CCAA, which are not yet in force , which confirm that during CCAA proceedings the collective agreement remains in force, unless amended by agreement of the parties.
Just two days after this decision, AbitibiBowater sought, and was granted permission by the court, to suspend all of its otherwise required special payments to fund the solvency deficiencies in its defined benefit pension plans for the period of the stay of proceedings.
This is not the first CCAA proceeding during which a company has ceased to make its special payments. It is noteworthy because the decision affects 33 pension plans with a large number of members and the combined total of the special payments which are now stayed exceed $13 million per month. In the past, other companies in CCAA protection have relied on permissive language in the initial court order which granted the stay of proceedings to cease making these payments. AbitibiBowater took the step of bringing a motion to confirm that it would not make the payments. The court accepted the company’s claims that it did not have the liquidity to cover these payments and that if required to make the contributions, the company could be forced to close operations resulting in an immediate loss of jobs. While the company has received a temporary reprieve from its solvency funding obligation, unless the pension deficits are otherwise dealt with in the CCAA process, these special payment funding obligations will resume if and when AbitibiBowater emerges from CCAA protection.
For companies who are not subject to a CCAA stay of proceedings, these AbitibiBowater decisions provide no pension funding relief options. The majority of pension plan sponsors who are continuing operations during these difficult economic times, will wish to consider instead the solvency funding relief announced or enacted under the governing jurisdiction. For more information on those measures, please see our FTR Now “Towards Meaningful Solvency Relief” and our comprehensive chart detailing these measures as they have been enacted or announced across the country.
QUESTIONS?
If you have any questions arising out of this FTR Now, please contact one of the members of our Pension & Benefits Group listed below, or your regular Hicks Morley lawyer:
Elizabeth Brown Chair, Pension & Benefits Practice Group
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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HICKS MORLEY INFORMATION & PRIVACY POST
We’re happy to publish the first 2009 edition of the Hicks Morley Information and Privacy Post! As usual, we have summarized the most recent and notable cases relating to privacy and access to information, protection of confidential business information and the law of production.
So what’s new?
Much has been said about Leduc v. Roman, the case in which Mr. Justice Brown of the Ontario Superior Court of Justice granted leave to cross-examine a plaintiff in a motor vehicle accident suit about the nature of content he posted on his Facebook profile. This is the second Ontario case in which a judge has shown little appreciation for an argument that information posted in a "friends only" section of a social networking profile page should be treated as private in considering the appropriateness of production. Leduc is significant, but there are a number of other decisions we’ve reported that also demonstrate an intensifying new dialogue on the law of production and personal privacy. If you’re interested in this subject, Warman v. Wilkins-Fournier (on anonymous internet use) and British Columbia (Director of Civil Forfeiture) v. Angel Acres Recreation and Festival Property Ltd. (on non-party participation rights) are worth a read.
We’ve also covered the numerous recent “lawful access” cases – cases in which criminal defendants have argued that their Charter right to be free from unreasonable search and seizure has been violated because police have requested and obtained information from organizations to further an investigation, without seeking a warrant. For what these cases mean to employers, please see our recent client bulletin, Pretty Please: Police requests for employee personnel files.
We hope you enjoy, and encourage you to send this to your colleagues. If you don’t subscribe and would like to, please e-mail ftrnow@hicksmorley.com.
Dan Michaluk and Paul Broad, Co-editors
FREEDOM OF INFORMATION – APPLICATION
IPC SAYS UNIVERSITY FOUNDATION IS NOT PART OF UNIVERSITY UNDER FIPPA
Unlike many entities designated as “institutions” under FIPPA, universities have complex corporate structures and are often affiliated with related corporations. Though the definition of “institution” in FIPPA is fairly black and white – it rests primarily on express designation – the issue of FIPPA’s scope of application has been of some concern to Ontario universities since they were made subject to the Act in 2006.
On December 1st of last year, the IPC issued an order on point, and did indeed see the analysis as being simple and based on corporate status. Adjudicator Smith concluded:
Though records held by a non-regulated corporation but “controlled” by a FIPPA-regulated institution are subject to the right of public access, this order does lend some clarity to an important issue for universities.
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I find that the YUF is a separate corporation from the corporation that is the University. Therefore, I find that the YUF is not part of the University and that it is not subject to the provisions of the Act.
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York University, Re, 2008 CanLII 68864 (ON I.P.C.).
ONT. C.A. DEALS WITH CREATING RECORDS IN ONTARIO FOI LAW
The Ontario Court of Appeal has affirmed the IPC/Ontario’s position that records produced by replacing unique identifiers in a database with randomly generated numbers are “records” under Ontario freedom of information legislation.
This decision makes clear that Ontario institutions must ordinarily undertake programming tasks that enable them to provide access to information stored in databases, even to mask personal information by substituting de-personalized unique identifiers for identifying information. There are two clear limits to this rule: (1) a record only capable of being produced through a process that “unreasonably interferes with the operations of an institution” is deemed not to be a record and (2) a record that can only be produced with technical expertise not “normally used by [an] institution” is deemed not to be a record. The Court left open whether a record that can only be produced with “hardware and software or any other information storage equipment” not normally used by an institution is deemed not to be a record but said this interpretation was “open to argument.”
Toronto Police Services Board v. (Ontario) Information and Privacy Commissioner, 2009 ONCA 20 (CanLII).
FREEDOM OF INFORMATION – EXEMPTIONS
FC DOESN’T BITE ON BROAD ARGUMENTS IN ACCESS DISPUTE
The Federal Court upheld a Department of Foreign Affairs and International Trade decision to deny public access to information that was critical of the Afghanistan government because its disclosure could reasonably be expected to be injurious to international affairs.
Though the outcome turns on the evidence adduced by the Department in support of its exemption claim, the decision is nonetheless notable for the Court’s rejection of several broader arguments brought by the applicant and intervenor. The Court held:
- that a department is not precluded from shielding information about torture under the international affairs exemption because of the status of torture in international human rights norms;
- that a right of public access to government information is not protected under section 2(b) of the Charter; and
- that a department does not need to consider section 2(b) Charter values in deciding whether to apply a discretionary exemption in the ATIA.
Attaran v. Canada (Foreign Affairs), 2009 FC 339 (CanLII).
INVESTIGATIVE RECORDS THAT FIND THEIR WAY INTO PROSECUTOR’S BRIEF NOT EXEMPT AS “PREPARED” FOR COUNSEL
The Ontario Divisional Court held that the police investigation records are not exempt from public access as being “prepared” for Crown counsel merely because they are incorporated into a Crown brief.
The dispute involved the so-called “Branch 2″ privilege created by section 19(b) of the FIPPA. It exempts records from public access that were “prepared by or for Crown counsel for use in giving legal advice or in contemplation of or for use in litigation.”
The Court held that preparing a record for the (policing) purpose of investigating a matter and deciding to lay charges is distinct from preparing a record for the purpose of prosecution. It also held that the detailed exemptions in the Act for “law enforcement records” were an indication that the legislature did not intend the Branch 2 privilege exemption to protect the Crown brief. The law enforcement exemption includes a subpart meant to preserve trial fairness, but this could not be relied upon in the circumstances because the Crown had withdrawn the charges at issue.
Ontario (Attorney General) v. Information and Privacy Commissioner, 2009 CanLII 9740 (ON S.C.).
FREEDOM OF INFORMATION – OPEN COURTS
ONT. C.A. CONSIDERS PRE-TRIAL PUBLICITY, JURY CONTAMINATION AND THE INTERNET’S LONG MEMORY
A five-member panel of the Ontario Court of Appeal considered the constitutionality of the mandatory ban on publication of bail proceedings when requested by an accused. A majority of the panel (3 justices) read down the Criminal Code ban so that it applies only to charges that may be tried by a jury.
All members of the panel agreed that the mandatory ban breached freedom of the press. They also agreed on the purpose of the ban: to ensure a fair trial by promoting expeditious bail hearings, avoiding unnecessary detention and allowing accused to retain scarce resources to defend their cases. The panel members differed, however, on how to apply the Charter’s saving provision, section 1.
The majority, in judgement written by Madam Justice Feldman, held that the ban was over-broad in its application to charges that may not be tried by a jury. While finding that judges are “professional decision-makers” immune to the influence of pre-trial publication, the majority was not willing to invalidate the legislation as it applied against juries given the conflicting social science evidence on the impact of pre-trial publication on jury decisions. It held that the legislature is entitled to act upon a “reasoned apprehension of harm” in enacting laws based on such disputed domains.
The minority, in a judgement written by Mr. Justice Rosenberg, held that the conflicting evidence was a basis for striking down the ban in whole (with a 12-month suspension). The minority held that the salutary effects of the ban did not outweigh its deleterious effects because the causal connection between pre-trial publicity and jury contamination is weak and speculative.
Both the majority and minority made comments on the internet and the concept of practical obscurity and the internet’s “long memory.”
Toronto Star Newspapers v. Canada, 2009 ONCA 59 (CanLII).
BCCA UPHOLDS BAN ON IDENTIFYING THIRD-PARTY SUSPECT
The British Columbia Court of Appeal upheld a ban on identifying a man linked to a series of sexual assaults that will be raised in Ivan Henry’s appeal from conviction.
Ivan Henry was convicted on several sexual assault charges in 1983 and served 26 years in prison. In mid-January, the British Columbia Court of Appeal granted his application to reinstate a previously dismissed appeal. As part of the reinstated appeal, Mr. Henry will raise a series of sexual assaults that occurred after his arrest that involved a similar modus operandi to that used by the perpetrator of the assaults for which he was convicted. “Mr. X” was charged and convicted for perpetrating three of these assaults in 2005 and is now on parole. He has not been charged in respect of any of the other assaults.
The Court of Appeal applied the Dagenais/Mentuck test and upheld the publication ban, finding that a continuation of the ban is necessary to protect Mr. X’s privacy interest and will have a minimal impact on free expression and open justice.
R. v. Henry, 2009 BCCA 86 (CanLII).
FREEDOM OF INFORMATION – PROCEDURE
INFORMATION COMMISSIONER CAN IMPOSE CONFIDENTIALITY SCREEN ON JOINT LEGAL RETAINER
The Federal Court held that the Information Commissioner of Canada acted lawfully in making a confidentiality order that prohibited Crown counsel from sharing information with the Crown that it gained while jointly representing individual Crown servants.
The Crown servants were compelled to give evidence before the Deputy Commissioner in the course of his investigation into an ATIA complaint. Department of Justice counsel accompanied the witnesses and acted as their counsel. In order to preserve the integrity of his investigation, the Deputy Commissioner prohibited the witnesses from disclosing the questions asked, answers given and exhibits used in the examination and prohibited counsel from disclosing the same. The Crown applied for judicial review of the orders, arguing that they interfered with its solicitor-client relationship with Crown counsel.
The Court held that the Information Commissioner has an implicit power to make confidentiality orders and that the potential for a conflict of interest, given that the witnesses were not high-ranking officials, made the Deputy Commissioner’s orders reasonable and necessary in the circumstances. The Court also rejected an argument that the confidentiality orders unjustifiably violated section 2(b) of the Charter.
Canada (Attorney General) v. Canada (Information Commissioner) 2007 FC 1024 (CanLII), aff’d 2008 FCA 321 (CanLII).
PRIVACY – APPLICATION AND JURISDICTION
NBCA SAYS FEDERAL COURT IS PROPER FORUM FOR PIPEDA CHALLENGE
The New Brunswick Court of Appeal held that the Federal Court is the proper forum for a broad challenge to the powers granted to the federal Privacy Commissioner by PIPEDA. Despite the applicant’s constitutional validity argument, which it had made in the alternative, the Court held that the matter was essentially a request for judicial review of an OPC decision. Given this characterization, the Court of Appeal held that the Federal Court was the proper forum.
This is not a privacy judgement, but it is nonetheless noteworthy, given the thrust of the applicant’s substantive objection. As a defendant’s insurer, it claimed the OPC had no jurisdiction to deal with its video surveillance of a plaintiff. The resolution of this argument would have broad significance in defining the meaning of PIPEDA’s application provision, which is triggered where an organization collects, uses or discloses personal information “in the course of commercial activity.”
State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada, 2009 NBCA 5 (CanLII).
CHARTER CHALLENGE TO PIPEDA INVESTIGATION REJECTED
The Ontario Court of Appeal affirmed the dismissal of an application that claimed RBC violated section 8 of the Charter when it investigated a case of mortgage fraud.
RBC had collected information from TD Bank which allowed it to pursue an alleged fraud. Both banks are members of the Bank Crime Investigation Office of the Canadian Bankers Association, a designated “investigative body” under PIPEDA. They relied on sections 7(3)(d)(i) and 7(3)(h.2) of PIPEDA in sharing the information. The Applicants took issue with these provisions and RBC’s actions taken in reliance on these provisions.
In February, the Superior Court of Justice held that the grant of discretion to make non-consensual disclosures of personal information in PIPEDA did not necessarily threaten Charter rights, so was not unlawful itself. It also held that RBC was not acting as a government agent in its investigation, and therefore was not bound directly by the Charter.
The Court of Appeal affirmed the application judge’s reasoning and added that the “main protagonist” was in a solicitor-client relationship with RBC that stripped him of standing to make a section 8 claim: “In the circumstances, he cannot lay claim to a reasonable expectation of privacy in the records relating to the receipt and disbursement of funds received from his client concerning the suspect mortgage transactions.”
Royal Bank of Canada v. Ren, 2009 ONCA 48 (CanLII).
PRIVACY – COLLECTION
ARBITRATOR ISSUES STRONG AWARD IN ALLOWING EMPLOYER TO IMPLEMENT BIOMETRIC TIMEKEEPING
Arbitrator Lorne Slotnick dismissed a grievance that challenged the implementation of a biometric timekeeping system.
The employer purchased a Kronos system and required employees to enrol. The system works by matching a person’s partial fingerprint against a 348-byte numeric representation or “template” of the fingerprint that is created in the enrolment process. The employer brought evidence that fingerprint templates were kept secure and could not readily be used to recreate a fingerprint image that could be used by law enforcement. The employer also admitted that it did not have a serious “buddy punching” problem, but wanted the superior biometric system anyway.
Arbitrator Slotnick applied a balancing test and dismissed the grievance because the employer had proven a concrete benefit to the system and that its invasiveness was minimal. He used strong language in doing so.
Unionized employers have been cautious about implementing biometric timekeeping systems since Arbitrator Tims upheld two similar grievances in Dominion Colour and IKO Industries, the latter being upheld on judicial review. Though arbitrators are not bound by the decisions of other arbitrators, the facts underlying most challenges to these systems are similar. This decision and two similarly permissive decisions of the Alberta OPIC from last year are therefore persuasive, and are beginning to tip the balance of authority in employers’ favour. In fact, Arbitrator Slotnick noted that Dominion Colour and IKO Industries were not distinguishable on their facts, but that he preferred a different balancing of interests.
Agropur (Natrel) v. Milk and Bread Drivers, Dairy Employees, Caterers and Allied Employees (Teamsters Local Union No. 647), 2008 CanLII 66624 (ON L.A.).
COURT REJECTS COMPLAINT ABOUT INTELLIGENCE GATHERING THROUGH CORPORATE E-MAIL SYSTEM
The Federal Court dismissed a PIPEDA application that alleged that an executive had unlawfully collected personal information by sending an e-mail to members of his firm to inquire about the applicant.
The facts leading to the application are somewhat convoluted. Martha McCarthy, a prominent family law lawyer in Ontario, had represented the applicant’s wife in a contentious family law dispute. The judgement reports that Ms. McCarthy told her brother, Peter McCarthy, that she had received two threatening phone calls from the applicant. Mr. McCarthy, a Vice-President at J.J. Barnicke, e-mailed the company’s sales force for information. His subject line stated “Mark Waxer” and his e-mail stated, “Does anyone know what firm Mark is with?” Mr. Waxer complained to the federal Privacy Commissioner and subsequently filed his application.
These facts raise a good issue about PIPEDA application, but the Privacy Commissioner took jurisdiction over the complaint and the court application did not address whether the collection at issue was made in the course of J.J. Barnicke’s commercial activity or for Mr. McCarthy’s personal purposes.
The Court dismissed the unlawful collection complaint because the applicant had not proven that Mr. McCarthy had actually collected personal information as a result of his request. Notably, the Court gave no weight to the applicant’s argument that it should infer that Mr. McCarthy’s inquiry was fruitful from the respondent’s failure to adduce evidence of a thorough search of its computer system (including a search of e-mail archives and back-up tapes). It was satisfied with Mr. McCarthy’s sworn denial, which the applicant did not challenge in cross-examination.
The Court also declined to award damages for breach of PIPEDA’s accountability principle. The Privacy Commissioner had concluded that J.J. Barnicke did not have appropriate privacy policies in place nor did it have a designated privacy officer accountable for compliance as required by the Principles 4.1 and 4.1.4 of Schedule 1 to PIPEDA. The company complied with the Commissioner’s recommendations, and she therefore deemed the complaint to be “well-founded and resolved.” Without revisiting the question of breach, the Court held that it was not proper to award damages in the circumstances. It held that the applicant could not claim damages for the stress of the proceedings themselves and held that he had not otherwise proven any other humiliation or embarrassment that would warrant a damages award. It noted that the applicant’s aggressive and assertive position throughout the litigation was inconsistent with his damages claim.
Waxer v. J.J. Barnicke Limited, 2009 FC 169 (CanLII).
ABCA QUASHES BANTREL SITE ACCESS DRUG TESTING AWARD
The Alberta Court of Appeal quashed an arbitrator’s endorsement of a site-access testing policy brought in by an Alberta construction site owner.
The arbitration panel’s March 2007 award was quite broad. Chairperson Phyllis Smith held that the parties’ incorporation of a model drug and alcohol guideline did not preclude pre-access testing of current employees and then focused most of her analysis on whether the testing requirement was reasonable in all the circumstances.
Unlike the arbitration award, the Court of Appeal’s judgement is narrow and based on contract language. It held that the panel erred in holding that the parties did not preclude site-access testing by incorporating the model. The model referred to “pre-employment” testing, which the Court stressed was different than the “pre-access” testing of current employees. It held that the incorporation of pre-employment testing impliedly excluded pre-access testing.
The Court also read a clause that was unique to one of the three collective agreements very narrowly. The agreement specified that the “parties will cooperate with clients who institute pre-access drug and alcohol testing.” The Court read this as an agreement to negotiate, reasoning that the word “cooperate” was not strong enough to indicate an endorsement of pre-access testing given its exclusion from the model.
United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 488 v. Bantrel Constructors Co., 2009 ABCA 84 (CanLII).
ARBITRATOR SIMMONS REJECTS CHALLENGE TO BAG SEARCH
Arbitrator Gordon Simmons dismissed a motion to exclude evidence obtained in a bag check conducted by a municipal employer.
The employer found stolen goods after examining the contents of two bags that were left near a receiving area of a care home. One of the bags was left open and there was signage nearby indicating that personal belongings should not be left unattended. The Union argued the evidence should be excluded because the employer breached section 8 of the Charter.
In the circumstances, Mr. Simmons held that the grievor had abandoned her expectation of privacy. More significantly, he held that the Charter did not apply to the municipality in its management of the grievor’s employment relationship. In making this finding, Mr. Simmons relied on the Supreme Court of Canada finding in Dunsmuir, where it held that the termination of public sector employees is generally governed by private law.
Ottawa (City) and Ottawa-Carleton Public Employees Union, Local 503 (Nguyen Grievance), [2009], O.L.A.A. No. 37 (Simmons) (QL).
ALTA. Q.B. QUASHES PAWN SHOP ORDER
The Alberta Court of Queen’s Bench quashed an order of the Information and Privacy Commissioner of Alberta that dealt with a City of Edmonton directive to second hand goods dealers that required them to collect the personal information of individuals selling used goods.
The City required dealers to collect the name, date of birth, gender, eye colour, hair colour and identification details of all sellers and upload this and other information to a database hosted by a third party under contract to the City. The police could access the database, but the information also remained available to dealers (presumably) for use in their business.
In February 2008, the IPC ordered the City to stop collecting information and to destroy its database. It held that the scheme established a “collection” by the City, but that this collection violated the Alberta FIPPA because it was not authorized by law, was not collected for the purpose of law enforcement and was not necessary for an operating program or activity of the City. The key finding was that the City’s longstanding bylaw, which required used goods dealers to make information available to peace officers, did not allow the City to implement a scheme whereby information is uploaded to a database under the City’s control.
The Court of Queen’s Bench held that the IPC’s reading of the bylaw was too strict and that the bylaw provision that required dealers to “record” and “make available” information authorized it to direct the uploading of personal information to a secure database to be accessed on a standing basis. The outcome of the Queen’s Bench decision did not turn on this finding, because it held, in any event, that the City was not collecting information through dealers. Since dealers had their own purpose for collecting the information and also collected and uploaded additional information to that required by the City, the Court held they were not the City’s agents. According to the Court, the scheme entailed a collection by the police rather than the City, a collection that was lawful because it was made for the purpose of law enforcement. Finally, the Court held that the Commissioner erred in ordering the destruction of the database.
The Queen’s Bench decision is lengthy and includes more findings than described in this summary. Though most of the Court’s conclusions are technical, it does seem to comment generally on the interpretation of municipal powers as they pertain to personal privacy and on the proper characterization of data flows. Moreover, the Court’s rather quick, but clear, conclusion that the collection was for “law enforcement” purposes is significant and appears to conflict with the Ontario Court of Appeal’s finding in the 2007 Cash Converters case. These points of significance aside, there is also an interesting subtext that is illustrated by the Court’s rather complete and forceful quashing of the OIPC order.
Business Watch International Inc. v. Alberta (Information and Privacy Commissioner), 2009 ABQB 10 (CanLII).
PRIVACY – DISCLOSURE
ALBERTA COURT UPHOLDS PRIVACY COMPLAINT FOR DISCLOSURE OF FACULTY MEMBER MERIT AWARD
The Alberta Court of Queen’s Bench affirmed an Alberta OIPC finding that a university had breached the Alberta FIPPA by disclosing a faculty member’s recommended merit increase.
The complaint involved a document circulated within the complainant’s department that included information about the department chair’s annual merit increase recommendations. The document did not include names, but associated merit increase recommendations with data on papers published. The complainant argued that his merit increase was disclosed given that it was associated with data about an unnamed person who had published 37 papers in the year. The university argued that it had only disclosed statistical information.
The Court’s finding is very fact-specific, but does illustrate that whether information is “personal information” – information about an identifiable individual – depends on the context in which it is published. The Court held that the OIPC reasonably concluded that the data on papers published revealed the complainant’s identity given the size of the department and the complainant’s well known and relatively superior level of academic output.
There are other aspects of the Court judgement that are noteworthy, including the more principled (but not surprising) finding that the document was not excluded from the act as “research information” or “teaching material.”
University of Alberta v. Alberta (Information and Privacy Commissioner), 2009 ABQB 112 (CanLII).
PRODUCTION – CONFIDENTIALITY
ONT. C.A. CONSIDERS DEEMED UNDERTAKING RULE
The Ontario Court of Appeal issued a judgement on the deemed undertaking rule. It held:
- that the rule only proscribes use and disclosure of information obtained in discovery by the recipient (and not by the provider, whose privacy interest the rule protects);
- that it acts as a shield against production in a subsequent action subject to its exceptions, including the exception for court-ordered relief; and
- that the “interests of justice” versus “prejudice” balancing test for court-ordered relief does not protect the personal privacy interest of an individual in the records at issue.
The last point arose because the records being considered by the Court included video surveillance footage and medical information of the plaintiff. She had obtained these records from her opponent in prior litigation, thereby engaging her opponent’s privacy interest. It appears that she attempted to argue that her personal privacy interest in the records was relevant to the exercise of discretion in ordering relief, given the content of the records. The Court disagreed, and said the only privacy interest engaged by the rule is that of a party compelled to produce records.
Kitchenham v. Axa Insurance Canada, 2008 ONCA 877 (CanLII).
PRODUCTION – CRIMINAL
SCC BROADENS SCOPE OF CROWN’S “FIRST PARTY” DISCLOSURE DUTY AND MORE
The Supreme Court of Canada issued a unanimous judgement that broadens the scope of the Crown’s duty of disclosure to an accused person, and facilitates an accused person’s right to third-party production.
On Crown-to-accused (”first party” or Stinchcombe) production, the Court held that the Crown is not a single entity for the purposes of its obligation to disclose information in its possession and control. It did, however, stress that the “investigating Crown” has a positive duty to build-out the Crown brief by making “reasonable inquiries” of other Crown agencies and departments. This duty, said the Court, includes a duty to collect and disclose records of police misconduct, at least where an officer who is likely to be a witness at trial has a record with some arguably relevant blemishes. The broadening of the Stinchombe duty means that accused persons will no longer face the prospect of fishing for records of police misconduct or other similar information by bringing third-party (O’Connor) motions.
The Court also modified the two-stage O’Connor process: an accused person must still establish “likely relevance” to justify a court review of third-party records, but at the second stage reviewing judges must now focus on the “true relevance” of the records rather than the competing interest in protecting personal privacy. If a judge concludes that records examined are truly relevant, the Court held they should be ordered to be disclosed despite any subject’s competing privacy interest. Reviewing judges should still be concerned with personal privacy, but the Court suggested that barring production was a less appropriate means of protecting personal privacy than means such as redaction and protective orders. While establishing this production-favouring rule, the Court stressed that there is a higher standard for production of records in sexual assault cases; as such, production in these cases is still governed by the Criminal Code and Mills.
R. v. McNeil, 2009 SCC 3 (CanLII).
PRODUCTION – PRIVILEGE
GOVERNMENT FAILS TO MEET BURDEN OF PROVING SOLICITOR-CLIENT PRIVILEGE
Madam Justice Layden-Stevenson of the Federal Court held that the Minister of Fisheries and Oceans failed to prove a claim that two sentences in a ministerial briefing document were subject to solicitor-client privilege. The Minister argued the sentences, which were not authored by a lawyer, were revealing of legal advice. In dismissing this claim, Layden-Stevenson commented:
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Regarding the Minister’s submission that disclosure of the name of the lawyer is tantamount to disclosure of that which is subject to solicitor-client privilege, I would think that if that were so, it ought to have been stated in Mr. Ahluwalia’s affidavit.
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She also held that the Minister had waived privilege by implication given disclosure of similar information in the record before the Court.
Environmental Defence Canada v. Canada (Fisheries and Oceans), 2009 FC 131 (CanLII).
DEFENDANT CAN MAINTAIN PRIVILEGE AGAINST THIRD PARTY IT SUES FOR SPOLIATION
The Ontario Superior Court of Justice held that a defendant to a negligence claim could claim privilege in certain records against a third-party that it sued for destroying evidence related to its defence.
The matter arose out of a building fire. The owner sued a roofing contractor, who obtained several reports from a company hired to conduct an origin and cause investigation. It claimed litigation privilege in the reports in the main action. The roofing contractor later brought a third-party claim against the owner’s investigator, alleging that the investigator negligently destroyed evidence and prejudiced its defence. The third party brought a motion to compel the roofing contractor to produce the investigation reports over which it had claimed privilege in the main action.
The Court held that the spoliation action was independent from the main action but that it was sufficiently related to the main action for privilege to apply across both actions. The Court also dismissed an argument that the defendant waived privilege by disclosing one of the reports subject to its privilege claim. It held that the plaintiff had not met its burden of proving an implied waiver.
Rudolph Meyer & Son Ltd. v. Endurowe Consulting, 2009 CanLII 10400 (ON S.C.).
ONTARIO COURT ADDRESSES SCOPE OF SETTLEMENT PRIVILEGE
The Ontario Superior Court of Justice dismissed a settlement privilege claim brought by a third party to a breach of confidence and unjust enrichment suit.
Pepall J. considered the applicable jurisprudence and held that settlement privilege does not shield information that is sought for a purpose other than use as an admission against interest. Given the agreement in dispute was relevant to issues of custom, damages and the breach of confidence claim itself, she dismissed the third party’s motion for protective relief without prejudice to its right to object to the agreement’s admissibility at trial.
Sabre Inc. v. International Air Transport Association, 2009 CanLII 9452 (ON S.C.).
PRODUCTION – PROCEDURE
BCCA SAYS NON-PARTIES GET NO NOTICE OF PRODUCTION MOTION DESPITE PRIVACY INTEREST
The British Columbia Court of Appeal dismissed an argument that various non-parties whose private communications had been intercepted by the RCMP should be given notice of a motion brought to compel production of the intercepts.
The production motion was brought by the Director of Civil Forfeiture in forfeiture proceedings. It appears to have been opposed by the defendants but not by the RCMP.
The motions judge held that notice ought to be given to the “objects of the interception” and adjourned the motion. He relied on Rule 44(5) of the B.C. Supreme Court Rules, which demands that persons “who may be affected” by an interlocutory order shall be given notice of motion.
The Court of Appeal held the motions judge had erred. It reasoned that the Rules’ third-party production provision – Rule 26(11) – is a complete code that governs the requirement to give notice of third-party production motions in British Columbia. This provision only requires notice to the third party and “other parties” but not other persons “who may be affected.” The Court held that the general notice requirement in Rule 44(5) could not override the specific and more limited notice requirement in Rule 26(11).
Though the outcome of the appeal is based on interpretation, the Court also made some broad statements about the non-party privacy. It suggested that the Court ought to guard non-party privacy, even by ordering a two-stage hearing, but held that notice to non-parties would only lead to “unnecessary expense and complication” and would conflict with the Court’s mandate to “secure the just, speedy and inexpensive determination of every proceeding on its merits.”
British Columbia (Director of Civil Forfeiture) v. Angel Acres Recreation and Festival Property Ltd., 2009 BCCA 124 (CanLII).
PRODUCTION – SCOPE
ALTA. C.A. SAYS PLAINTIFF’S MOTHER NEED NOT ANSWER QUESTIONS ABOUT SON’S INJURIES
The Alberta Court of Appeal held that a third party (who was also the plaintiff’s next friend and mother) was not required to answer questions at examinations for discovery relating to the injuries suffered by the infant plaintiff.
The plaintiff claimed against a school bus operator for injuries arising out of an accident. The defendant third partied the mother, alleging that she was negligent in failing to provide instruction to her son. The mother denied negligence and causation, but did not dispute the plaintiff’s claim against the defendant or the quantum of damages claimed.
In these circumstances, the Court held that the mother was adverse in interest to the defendants on the issue of liability and therefore could be examined. However, it also held that the defendant could not ask questions about the plaintiff’s injuries on discovery because it was not adverse in interest to the mother on the damages issue: “In this case, the happenstance that the third party is the mother of the plaintiff should not be allowed to extend the scope of discovery beyond what is ‘relevant and material’ in the pleadings.”
Briggs Bros. Student Transportation Ltd. v. Collacutt, 2009 ABCA 17 (CanLII).
COURT INFERS THAT FACEBOOK PAGES INCLUDE RELEVANT INFORMATION ABOUT LIFESTYLE
The Ontario Superior Court of Justice granted leave to cross-examine a plaintiff in a motor vehicle accident suit about the nature of content he posted on his Facebook profile.
In defence of a claim for compensatory damages for loss of enjoyment of life, the defendant sought production of all content in the plaintiff’s Facebook. It did not examine the plaintiff on whether he had any photographs revealing of his post-accident lifestyle in oral discoveries, but learned of his Facebook’s existence after discovery and developed a theory that it would contain such photos.
Master Dash held that the existence of the plaintiff’s Facebook was not reason to believe it contained relevant evidence about his lifestyle. He distinguished the Court’s decision in Murphy v. Perger by noting the plaintiff in Murphy had produced publicly-available photos from her Facebook profile, therefore creating a reasonable suspicion that the private part of her Facebook contained additional relevant photos. Master Dash said that the defendant, without any such evidence, was just fishing.
The appeal judge disagreed, stating:
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With respect, I do not regard the defendant’s request as a fishing expedition. Mr. Leduc exercised control over a social networking and information site to which he allowed designated “friends” access. It is reasonable to infer that his social networking site likely contains some content relevant to the issue of how Mr. Leduc has been able to lead his life since the accident.
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Based on this inference, the appeal judge also said that a party should ordinarily be granted a right to cross-examine on an affidavit of documents where it does not have a right of discovery (as in Simplified Rules actions) and when a plaintiff who makes a claim that puts his or her lifestyle in issue produces “few or no documents” from his or her Facebook profile.
Leduc v. Roman, 2009 CanLII 6838 (ON S.C.).
BCCA DEALS WITH PRODUCTION OF CLASS MEMBER RECORDS IN PROPORTIONALITY DECISION
The British Columbia Court of Appeal affirmed an order that required the province to produce records pertaining to class members who had not opted out of a class proceeding.
The proceeding alleges systemic negligence and breach of fiduciary in the operation of a residential school. In ordering production of records related to individuals who had not opted out of a potential class of up to 2,200 members, the Court affirmed three findings:
- that production should not be denied because of the records’ potential misuse as evidence of individual incidents (given their prima facie relevance to the systemic breach claims);
- that production should not be denied based on privacy concerns given that potential class members were given notice and an opportunity to protect their files from disclosure by opting out; and
- that production should not be denied based on the scope of production (about 2.2 million pages of records), noting that the production request was not “a futile search for documents of unknown relevance.”
As the concept of “proportional” production takes greater prominence in Canadian civil procedure, this case is a nice illustration of how the cost of production can have various elements. One might argue that it demonstrates a rather traditional or fulsome-production view, where costs related to procedural complications and delay, privacy and document review do not weigh heavily in the balance.
Richard v. British Columbia, 2009 BCCA 77 (CanLII).
COURT ORDERS DISCLOSURE OF ANONYMOUS MESSAGE BOARD USERS’ IDENTITIES
The Ontario Superior Court of Justice ordered the owner-operator of a right-wing internet message board to disclose the identities of eight John Doe defendants who had posted commentary about lawyer Richard Warman.
There are two significant aspects of the decision.
First, the Court seemed to distinguish the BMG case (where the Federal Court of Appeal endorsed a protective balancing test) on the basis that the plaintiff filed an action directly against the website owner-operator. Website owner-operators may question whether their status as first or third parties should really make a difference.
Second, the Court relied on recent search and seizure cases that have endorsed voluntary identification of internet users by ISPs to police based on permissive ISP terms of service. It used these cases to draw a general conclusion that individuals cannot reasonably expect online anonymity. Though specific terms of service should govern, this aspect of the decision illustrates that ISP policy favouring disclosure to police may affect users’ right of anonymity as against potential civil claimants.
Warman v. Wilkins-Fournier, 2009 CanLII 14054 (ON S.C.).
“CROWN BRIEF” PRODUCTION ISSUE HEADING TO BCCA
The British Columbia Court of Appeal granted leave and expedited the appeal of an order that required the Vancouver Police Department to produce records that had become part of the Crown’s brief in an ongoing prosecution.
The plaintiff is the father of a man who was struck and killed by a motor vehicle in a hit and run. The defendant is the man charged criminally for the hit and run. The defendant’s criminal trial has been adjourned and will re-commence later this year. In the meantime, the defendant did not produce to the plaintiff the materials he received from the Crown in its disclosure. This led the plaintiff to apply for third-party production from the police. The Crown then objected, claiming litigation privilege and public interest immunity.
The Supreme Court ordered production last December. It ultimately applied a screening test like that endorsed by the Ontario Court of Appeal in D.P. v. Wagg and held that the Crown had not demonstrated that the balance of public and private interests weighed against production.
Though the finding under appeal is discrete, in granting leave, the Court of Appeal framed the issue broadly as being about “the treatment of police investigations results in civil proceedings while criminal charges are outstanding” – that is, as being about the very principles reflected in Wagg.
Wong v. Antunes, 2009 BCCA 60 (CanLII).
PRODUCTION – SPOLIATION
COURT PUTS OFF SPOLIATION CLAIM UNTIL TRIAL
Mr. Justice Lauwers of the Ontario Superior Court of Justice rejected a motion to dismiss a personal injury claim based on the defendant’s allegation of spoliation. The idea that spoliation claims should generally be settled at trial is not remarkable, but the Court did reject the defendant’s argument that spoliation claims relating to records of loss of earnings should be treated differently.
Also notable is the ambiguity in the claim, which seems to be more about bad record keeping than spoliation itself: “The heart of the problem from the viewpoint of the defendants is the lack of documents relating to Mr. Carleton’s income.” If there is no duty to keep records, there can be no valid spoliation claim when records are not available for production. This seems to be a simple case where bad business record keeping may prevent a plaintiff from meeting its burden of proving loss.
Carleton v. Beaverton Hotel, 2009 CanLII 4245 (CanLII).
MAN CA AFFIRMS DEFERRAL OF SPOLIATION HEARING TO TRIAL
Last December, the Manitoba Court of Queen’s Bench dismissed a motion for an order striking out a statement of defence on the basis of a spoliation claim. It stressed that spoliation claims will ordinarily be dealt with at trial. This March, the Manitoba Court of Appeal issued a short endorsement in dismissing an appeal of this finding.
Commonwealth Marketing Group Ltd. et. al. v. The Manitoba Securities Commission et. al., 2009 MBCA 33 (CanLII).
APPEAL COURT RESTORES DEFENCE STRUCK AS A REMEDY FOR SPOLIATION
The Prince Edward Island Court of Appeal held that a motions judge erred in striking a statement of defence as a sanction for non-production. The Court suggested that such a strong sanction should not be utilized for discovery abuse in the absence of a finding of bad faith or contempt given the difficulties in assessing relative prejudice before trial. It nonetheless sanctioned the defendant by imposing conditions on the use of records subsequently found, by specifying that the trial judge may presume damages and by awarding costs of the motion and appeal to the plaintiff.
Jay v. DHL, 2009 PECA 2 (CanLII).
SEARCH AND SEIZURE
COURT EXCLUDES EVIDENCE FOR UNLAWFUL POLICE ACCESS TO PASSENGER MANIFEST
The Nova Scotia Supreme Court excluded evidence supporting drug trafficking charges after finding that the RCMP breached PIPEDA by reviewing a WestJet passenger manifest without making a formal request.
The issue of law enforcement’s access to personal information held by business organizations has arisen in a number of recent criminal cases, and it is becoming common for courts to judge the reasonableness of a police search in light of standards set by PIPEDA. PIPEDA restricts regulated organizations from disclosing personal information without consent, but includes an exception in section 7(3)(c.1) that allows for disclosure to law enforcement in response to a request that meets several formal requirements.
In this case, the RCMP reviewed a passenger manifest from a domestic flight, identified a passenger who had paid by cash shortly before the flight and who only had one piece of luggage and proceeded to search that passenger’s luggage. It found drugs and laid charges.
The Court held the RCMP breached PIPEDA because it did not make a “request” required by section 7(3)(c.1), given its “cozy” relationship with WestJet.
In addition to signalling that the procedural requirements in section 7(3)(c.1) are likely to be read strictly, the judgement is notable for its close consideration of WestJet’s privacy policy. The policy said that WestJet might be “required by legal authorities” to disclose personal information without consent, but did not say that WestJet would voluntarily cooperate with law enforcement. The Court said the policy “seems to emphasize that WestJet would only collect and disclose what is required by law and nothing more.” This weighed in favour of finding the search to be unreasonable and therefore unconstitutional.
The Court then excluded the evidence based on an application of the Collins test. In characterizing the breach as serious it said, “It is not the rights of a drug trafficker here that I am protecting. It is the rights of a member of society who chooses to give personal information to an airline ticket agent which is recorded on a flight manifest.”
R. v. Chehil, 2008 NSSC 357 (CanLII).
APPEAL COURT SAYS “NO KNOCK” ENTRIES NEED NOT BE ENDORSED IN A WARRANT
The New Brunswick Court of Appeal held that the police need not have express authorization to use a “no knock” or “dynamic” entry in searching a suspect’s residence. The thrust of the judgement is nicely summarized in the following paragraph:
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Neither the police nor the Crown requested the issuing judge make an endorsement authorizing a “no knock” entry. Furthermore, the issuing judge did not, on his own motion, choose to make such an endorsement. I also note there is no legislative provision which requires or permits such an endorsement. No doubt for good reason. It does not take much imagination to think of situations where circumstances change after the issuance of a warrant, which either eliminate the need for a “no knock” entry or require one which was previously thought unnecessary. Following the issuance of the warrant, police officers and judges should not be required to meet again to address the appropriate mode of entry. To impose such a requirement upon police and the judiciary would result in the micro-management of police investigations. The development of the law should not sanction the management of police operations by the judiciary except where necessary in the course of fulfilling judicial functions. I do not consider the pre-determination of the method by which police are to exercise their discretion and respond to changing circumstances in executing the search of a suspect’s premises to constitute part of the judicial function.
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Based on this reasoning, the Court also held that the evidence the Crown can use in demonstrating the reasonableness of using a no knock entry is not limited to that which it put before the issuing judge.
R. v. Perry and Richard, 2009 NBCA 12 (CanLII).
CHALLENGE TO “LAWFUL ACCESS” EXEMPTION IN PRIVACY LEGISLATION DISMISSED
The Saskatchewan Provincial Court dismissed a Charter challenge to a provision in the Saskatchewan Freedom of Information and Protection of Privacy Act that allows the Saskatchewan government and its agencies to answer law enforcement requests for personal information without obtaining individual consent.
The police identified an IP address of a computer used to share child pornography on the internet and made a request, without a warrant, for subscriber records to SaskTel in order to identify the accused as being associated with the computer. SaskTel provided the information without consent based on the exemption in section 29(2)(g) of Saskatchewan FIPPA, a fairly typical “lawful access” provision, i.e. one that allows an entity bound by privacy legislation to answer law enforcement requests for personal information. The accused claimed that this permissive provision allowed the police to conduct a search in violation of two Charter rights: (1) the section 7 right not to be deprived of liberty except in accordance with the principles of fundamental justice (on the basis of the provision’s over breadth and vagueness); and (2) the section 8 right to be free from unreasonable search and seizure.
The Court dismissed both claims with little reasoning. It quoted extensively from the Crown’s factum and held that the accused person’s position was inconsistent with the Supreme Court of Canada’s judgement in R. v. Plant and the Saskatchewan Court of Appeal’s judgement in R. v. Cheung. The Court’s decision will lack authority because the Court did not fully engage in the issues, but it does show that the “lawful access” issue is very alive.
R. v. Trapp, 2009 SKPC 5 (CanLII).
ANOTHER SUBSCRIBER DATA SEARCH CHALLENGE DISMISSED
On February 18th, the Ontario Superior Court of Justice held that the police conducted a lawful search by asking an ISP for a subscriber’s name and residential address in order to link that information with a known IP address. Unlike in its February 10th decision in Wilson (discussed below), the Court accepted that the disclosure of a subscriber’s name and residential address is revealing of the “details of the lifestyle and personal choices of [an] individual” because it allows for the identification of an anonymous internet user. The Court nonetheless held the applicant lacked a reasonable expectation of privacy in the information given the terms of the contract his mother (and co-resident) had entered into with the ISP.
R. v. Vasic, 2009 CanLII 6842 (ON S.C.).
BCCA SAYS NON-OCCUPANT HAS STANDING TO CHALLENGE SEARCH WARRANT
In a fact-driven decision released on January 2nd, the British Columbia Court of Appeal held that an accused person who did not occupy premises discovered to be a grow operation had standing to challenge a search of the premises.
The accused lived elsewhere, but the Court inferred possession and control from evidence showing the accused was the owner, possessed keys and was seen there on a few occasions in the two weeks before the search. It held that the trial judge erred in denying standing merely because the accused was not an occupant and that, based on possession and control and all the circumstances, the accused had a reasonable expectation of privacy that he was entitled to exercise.
R. v. Vi, 2008 BCCA 481 (CanLII).
ONT. S.C.J. OKAYS SEARCH WITHOUT WARRANT OF SUBSCRIBER DATA
On February 10th, the Ontario Superior Court of Justice dismissed a Charter application that challenged a letter request made by the police to an internet service provider for the name and address of an account holder associated with a specific IP address at a specific point in time.
The Court held that the applicant had no expectation of privacy in the information disclosed, which the police used to obtain a warrant and lay child pornography charges. The Court narrowly construed the personal information collected in the search as one’s name and address (or the name and address of a cohabiting spouse) and held that this information is not “biographical information” that is protected by the Charter. It also relied on the service provider’s contract of service, which expressly permitted the transfer.
R. v. Wilson, [2009] O.J. No. 1067 (S.C.J.) (QL)
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
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EMPLOYER BULLETIN: INFLUENZA A(H1N1)
You are all undoubtedly aware of the potential Influenza A(H1N1) (or “H1N1 virus”) pandemic that is currently underway.[1] While it is unknown at present just how serious or widespread this situation will become, employees are already expressing concerns, and it is important for employers to monitor the situation and to be prepared to respond as matters develop. Therefore, now is the time for you to consider what impact such a pandemic, should it transpire, would have on your workplaces and to understand your legal obligations as employers.
SICK LEAVE BENEFITS
Dealing first with contractual entitlements, employees unable to work because of illness caused by the H1N1 virus may be eligible to claim benefits under a sick leave policy. In this regard, they should be treated just like any other sick employee. Thus, the eligibility and procedural requirements of a sick leave policy would be applied as usual to the claims.
In the 2003 SARS crisis, questions arose as to the treatment of employees who had been quarantined, but who were themselves not ill – a situation that could occur again. It is possible that a broadly-worded sick leave policy may provide benefits for such a situation. However, if it does not, employers will need to carefully assess whether, for example, they would extend benefits on a gratuitous basis versus having employees apply for EI benefits (if they are made available).
EMPLOYMENT INSURANCE BENEFITS
In the absence of company paid sick benefits or where benefits are exhausted, employees may be entitled to Employment Insurance Act sickness benefits. Employees who face a reduction in “normal weekly earnings” of at least 40% because of illness, injury or quarantine are eligible for EI sickness benefits, provided that they have accumulated sufficient insurable hours. During the 2003 SARS crisis, the federal government implemented special loss of income relief for affected employees in various circumstances. At this time, it is not known whether the federal government would implement any special loss of income relief in response to an H1N1 virus pandemic.
EMPLOYMENT STANDARDS ACT, 2000 – LEAVES OF ABSENCE
The ESA, 2000 now contains two specific leave provisions that could apply in a pandemic situation.
First, where companies regularly employ fifty (50) or more employees, those employees will have an entitlement to ten (10) unpaid “personal emergency leave” days. This leave may be used for the personal illness, injury or medical emergency of the employee or a specified family member.
Second, in the case of a pandemic, employees may be able to claim entitlement to the new “declared emergency” leave that was added to the ESA, 2000 in 2006. This new leave gives employees the right to a leave of absence where an employee is unable to perform the duties of his or her own position because of a declared emergency.
The ESA, 2000 sets out certain criteria which must be met in order to qualify for entitlement under a declared emergency. First, either the Lieutenant Governor in Council or the Premier must declare an emergency under the Emergency Management and Civil Protection Act. Additionally, employees must be unable to work because either:
- they are subject to an order under the Emergency Management and Civil Protection Act;
- they are subject to an order under the Health Protection and Promotion Act; or
- they are needed to provide care or assistance to a specified individual.
With respect to the first bullet point, the government may make orders under the Emergency Management and Civil Protection Act in order to: regulate or prohibit travel to, from or within any specified area; evacuate individuals and animals, or remove personal property from a specified area; and close any place, whether public or private, including any business, office, school, hospital or other establishment.
The second bullet point relates to the Health Protection and Promotion Act and refers to section 22 of the Act, which gives medical officers of health the power to order individuals to take or refrain from taking any action specified in an order. These orders can be quite broad and can include orders to be quarantined, to submit to an examination by a physician or to conduct oneself in such a manner so as not to expose another person to infection.
With respect to the third bullet point, the list of specified individuals includes the following:
- the employee’s spouse;
- a parent, step-parent or foster-parent of the employee or the employee’s spouse;
- a child, step-child or foster child of the employee or the employee’s spouse;
- a grandparent, step-grandparent, grandchild or step-grandchild of the employee or the employee’s spouse,
- the spouse of a child of the employee;
- the employee’s brother or sister; or
- a relative of the employee who is dependent on the employee for care or assistance.
Declared emergency leave generally ends the day the declared emergency is terminated or disallowed, and the employee’s right to the leave will usually end at the same time (subject to a few exceptions, including where an employee is exercising the right to declared emergency leave to care for a specified individual).
In the event that an emergency is declared by the government, employers would need to monitor the situation carefully, and would need to consult the ESA, 2000 to determine the rights of its employees in the context of the actual declaration.
OCCUPATIONAL HEALTH AND SAFETY ACT – WORK REFUSALS
Under the Occupational Health and Safety Act, most employees have the right to refuse work if a condition of the workplace “is likely to endanger” their health or safety.[2] Employees encountering the H1N1 virus in the workplace (or who fear that they may encounter it) may seek to exercise their right to refuse work in this regard.
The Act outlines a specific work refusal procedure which must be followed. Employers cannot threaten to discipline an employee exercising a work refusal. When faced with a work refusal, the employer should immediately investigate, consider the right, and, failing resolution with the employee, notify a Ministry of Labour Inspector. Failure to comply with the Act may result in fines.
WSIB CLAIMS
The Workplace Safety and Insurance Act, 1997 provides compensation for “personal injury or illness arising out of and in the course of employment” and provides compensation where “a worker suffers from and is impaired by an occupational disease that occurs due to the nature of one or more employments in which the worker was engaged”. Workers infected in the course of employment may be entitled to services and benefits. Such claims were made by health care workers during the 2003 SARS crisis.
WORKFORCE ADJUSTMENTS AND STRATEGIC PLANNING
During the 2003 SARS crisis, a number of employers found that they had a downturn in business and were required to make workforce adjustments. Because of the current economic crisis, a number of employers are already engaging in such adjustment measures, and a further downturn in business will require a careful response that takes into account measures that have already occurred.
It is important that employers begin to plan now for the possibility of a pandemic occurring and for the resulting effects on your business. While you may not need to implement it, a good contingency plan will help to ensure that your business is well-prepared to face the challenges that may arise.
QUESTIONS AND ANSWERS
Many employers are already facing a number of questions from employees relating to the current H1N1 virus outbreak. In replying to these questions, it is important for employers to attempt to balance a responsible approach to legitimate employee concerns while taking care not to act unreasonably or based on misinformation or unreasonable fears. The task of employers is made more complex because, at the time of writing, there have been no specific directives or orders issued by health authorities that would dictate a required employer response.
Keeping these competing issues in mind, we have set out below some of the emerging questions and answers, along with some general guidelines. For specific advice, please directly contact one of the Firm’s lawyers.
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Can an employer require an employee who has recently visited Mexico to remain at home for a period of time upon his or her return?
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At this time, no quarantine orders have been issued by the health authorities. At the same time, it is becoming apparent that individuals who have recently visited Mexico have a heightened risk of contracting the H1N1 virus.
In these circumstances, it is likely reasonable for employers to ask employees to remain away from the workplace for a period of time until it can be safely determined that the employee does not have the H1N1 virus. However, if the employer is requiring the employee to remain at home, the employer should continue to pay the employee’s wages and benefits for the lost time.
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Can an employee insist on wearing protective equipment – for example, a face mask?
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This answer depends on the reasonableness of the risk to the employee in question. Where, for example, an employee has direct contact with individuals known to have, or likely to have, contracted the H1N1 virus (for example, a health care worker), this could likely be considered a “reasonable precaution”.
If an employee does not have this type of heightened risk, and has duties that involve interactions only with fellow employees or the general public, protective equipment is likely unwarranted at this time.
However, employers should continue to monitor the situation very carefully, and if there is evidence that the H1N1 virus is beginning to spread more readily throughout the general population, a demand for protective equipment may indeed become a reasonable precaution.
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Can an employer restrict employee travel?
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Clearly, an employer can place restrictions on its employees’ business-related travel. In some cases, employees may wish to refuse a travel assignment to Mexico or other high risk places. Employers would have to assess these situations carefully, and may need to consider postponing such business travel until the medical situation has improved.
The question of leisure travel is more problematic. It is possible that, in some limited circumstances, an employer could have a legitimate interest in trying to limit leisure travel, particularly where the travel could have a negative impact on business operations. However, a better approach at present would be to ensure that employees who are travelling understand the risks to themselves and others should they visit a high-risk area.
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Should employers be communic | | | | |