01 August 2016

The future of HR for employers

Last month's ruling by the Supreme Court of Canada in Wilson v Atomic Energy of Canada Ltd—even though it is ostensibly restricted in scope to federally regulated employers—should give pause to all organizations in the management of their workforces. Taken together with other recent SCC judgments, we can see that the HR landscape is becoming quite different in many respects from what many of us have been used to over these past few decades.

This most recent decision has several notable aspects that have far-reaching consequences: Much comment has been made about the inability of federally regulated employers to terminate non-managerial employees without just cause (provided that they have worked for more than twelve months). It was noted that the federal scheme displaced the common law with a scheme requiring reasons to be given for dismissal, and that the payment of a generous package cannot avoid a determination under the Canada Labour Code on whether the dismissal is unjust. I can see this having an impact in dealing with complaints on human rights issues, such as under Ontario's Human Rights Code, where settlements can be reached only after a complaint has been filed. This scheme appears to qualify as another instance where the common law has been displaced in favour of a statutory right.

One commentator has suggested that perhaps, in the federal sphere, probation periods can be extended to twelve months in order to be able to quickly dismiss employees before the Code's protections kick in. I can see several practical reasons why this would not be so easy from the employer's point of view:
  • such periods only exist when specified in an employment agreement, and its consequences must be explicitly laid out therein;
  • they cannot be unreasonable in length (which will depend on the nature of the position and the qualifications of the incumbent), but can be extended when the agreement explicitly provides for such an option;
  • there can be liability for negligent misrepresentation, where the parties are each under a duty to exercise reasonable care to ensure that any representations they make are correct, which can impact on the intent being expressed for the use of probation;
  • if the specified period is greater than three months, the agreement must comply with the minimum notice provisions in the Employment Standards Act, 2000;
  • liability for wrongful dismissal will still occur if termination occurs before a probation period even begins, as noted in a recent BC case;
  • termination within the period does not mean that notice (or pay in lieu thereof) can be avoided, as the common law still requires adequate notice to be given even when statutory notice is not required; 
  • keep in mind that employers in Québec are required to act in good faith during all stages of the employment relationship, while the common law provinces have such a duty only during the relationship and its termination.
  • termination can only be done in good faith, and that concept should be reinforced by stating within the agreement the purpose for which the probation period is required, for which adequate documentation should be kept to support the employer's assessment of the employee's performance;
  • however, there have been cases where a court has held that termination can occur without notice and without reasons when not done in bad faith.
The above list is not exhaustive, but it applies to provincially regulated employers as well, and other concerns may easily arise. These are interesting times indeed!

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