Canadian Employment Law Today

July 15, 2020

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian HR Reporter, 2020 Canadian Employment Law Today Canadian Employment Law Today | | 7 More Cases More Cases agreement." According to Carras, Altus' CEO told him he would be moved to a consulting arrangement after the first year. Carras also agreed to a lower salary in ex- change for stock options in Altus. To encour- age Carras to stay on for the full three years, Carras wouldn't be entitled to the stock options until the end of the last day of the employment agreement's term. To receive the stock options, Carras had to be actively employed with Altus on the last day of the agreement's term or be providing consulting services under a consulting agreement, unless Altus terminated him without cause. The sale of RealNet closed in July 2014 and Carras continued to serve as its president into early 2015, when Altus decided to merge Re- alNet with three other divisions into a new division called Altus Data Solutions. Carras expressed interest in leading the new division, but Altus didn't think he would be a good fit and felt he was better suited to remain in an external market-facing role. Shift to consulting role In early April 2015, Carras told Altus' presi- dent of research, valuation and advisory in Canada that he would like to discuss a "fork in the road" with regards to his role with Al- tus. In August, the company hired someone to lead the new, amalgamated division and Car- rus suggested he take on a "strategic advisor role that involved a one-year term in which he would attend the office twice per week and be paid monthly, and he would assist with business development, client meetings and market briefings. Altus agreed to the preliminary terms of the consulting agreement and, although it didn't finalize a written agreement or discuss the stock options from the original employment agreement, began paying Carras monthly and providing him with administrative support in exchange for market-facing services and at- tendance at the office two days per week. In January 2016, the managing director of the new division asked Carras about the na- ture of his consulting work while reviewing the budget. Carras said he considered his con- sulting services to be the equivalent of termi- nation pay or pay in lieu of notice of termi- nation and he would leave at the end of the one-year term. He also said it allowed Altus to "leverage his relationships" and "bounce ideas off him" while he was still there. In August 2016, the one-year consulting term ended. Carras went out for a drink with Altus' CEO to mark the end of his relationship with the company. Carras went on vacation afterwards and, when he returned, his Altus email and telephone number had been dis- abled. He didn't come into the Altus office anymore and no longer received any payment from the company. Carras worked on other projects, including some he had started while still consulting for Altus, and founded new companies. On Aug. 4, 2017, Carras contacted Altus about exercising his stock options, as it had been three years since Altus had acquired RealNet and he had signed the original em- ployment agreement. Altus responded that he wasn't entitled to stock options because he wasn't currently employed with the company or providing consulting services to it. Constructive dismissal claim Carras filed a claim for damages, saying Al- tus had terminated his employment after one year when it merged RealNet with other divi- sions and didn't offer him a new role, instead converting his employment to a consult- ing position. This amounted to constructive dismissal without cause and entitled him to stock options, he argued. The court found that Carras' position didn't change when Altus merged RealNet into a new division under someone else. Altus want- ed Carrus to continue performing the same external market-facing duties he had been doing and, although Carrus was interested in heading the new, amalgamated division, it was a different role. The company's failure to put Carrus in that role wasn't a significant change in the terms of his employment, said the court. The court noted that, after the merge, Altus didn't take any formal steps to separate Carras from the terms of the original employment agreement signed in 2014 and Carras didn't indicate that he felt his employment was be- ing terminated. Carras didn't ask to have his stock options conveyed to him and never asked about their status during the following year when he was performing consulting ser- vices. If he had, Altus "would have been con- tractually required to confirm they were still available," the court added. "There was no constructive dismissal be- cause the employer did not act as if the agree- ment was at an end or as if it was no longer bound by it." The court also found that the original em- ployment contract "anticipated that the par- ties could agree to alter the form of their rela- tionship from employment to a consultancy," which they did, therefore, "carrying out the contractual intent." There was no ambiguity in this contractual intent, as Carras was "a sophisticated individual with extensive busi- ness experience" and it was his proposal to move into a consulting role in August 2015 — a proposal Altus accepted and under which it began paying him, said the court. While the court found there was no con- structive dismissal, it also pointed out that, if there was, Carras acquiesced to the changes in the employment relationship. Carras didn't dispute the appointment of someone else as president of the new division, ask for sever- ance pay or claim he was entitled to receive his stock options at the time of the change. In fact, Carras initiated the negotiations for his consulting agreement and worked for one year under the terms he proposed, said the court. Carras' constructive dismissal claim was dismissed. For more information, see: • Carras v. Altus Group Limited, 2020 ONSC 2936 (Ont. S.C.J.). « from SHIFT TO on page 1 Employment agreement raised possibility of redefining role The employee suggested he take on a strategic advisor role for a one-year term. Proactive payroll « from KEEPING on page 3 ficulties aside, employers still must continue remitting payroll deductions by their remit- tance due dates. The CRA provides an online payroll deductions calculator (https://www. canada.ca/en/revenue-agency/services/e-services/e- services-businesses/payroll-deductions-online-cal- culator.html) to assist employers with payroll deductions and remittances. With a return to work imminent across some industries and workforce staffing lev- els shifting dynamically in others, the best practice is to be proactive and conduct a regular review of your organization's pay- roll deduction processes and requirements. That could involve working with a labour and employment lawyer to fully understand an organization's obligations, but certainly with HR and accounting teams to ensure remittances are meeting government-man- dated deadlines and that payroll deductions are accurate. The last outcome your organization needs is to persevere through COVID-19 only to have an intrusive CRA audit and potential penal- ties due to payroll deduction errors. Organize and manage this responsibility carefully now to protect your bottom line later — and save your HR team a great deal of stress and time in the process.

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