Canadian Employment Law Today

December 16, 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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Answer: When an employee is terminated, the presumption is that they will be provided with working notice of termination. This is referred to as the reasonable notice period, the length of which is determined through statute and com - mon law. More often than not, an employer will pay the monetary equivalent in lieu of having the employee work through the reasonable no- tice period. However, the employee is entitled to anything they would have earned during the no- tice period, regardless of whether the employee works through it or is paid in lieu of working it. Just recently, the Supreme Court of Canada (SCC) considered whether a terminated em- ployee is entitled to bonuses during their reason- able notice period in Matthews v. Ocean Nutrition Canada Ltd. The SCC held in the affirmative, un- equivocally stating that an employee is entitled to compensation for bonuses that they would have otherwise received during the reasonable notice period. The SCC awarded more than $1 million to a terminated senior executive for the loss of a long-term incentive plan (LTIP) pay - ment that would have accrued during his notice period, which a lower court had determined to be 15 months. The LTIP payment resulted from the sale of the company 13 months into the em- ployee's 15-month notice period, which consti- tuted the "realization event" necessary under the LTIP payment terms for the employee to receive payment. The SCC outlined a two-part test that will be helpful to employers in determining what bo - nuses should be included when terminating an employee. First, would the employee have been entitled to the bonus or benefit as part of their compensation during the notice period? Second, if so, are there any terms of the employment con - tract or bonus plan that unambiguously remove or limit the employee's entitlement? In response to this recent SCC decision, em- ployers should be mindful of the following: Ensure language excluding an entitlement that may become owing during a reason- able notice period is clear and unambigu- ous and that it complies with the applicable pro- vincial employment standards legislation. Employers should take this opportunity to review the language of any bonus, incentive or stock plans their employees take part in and determine the strength of the exclusionary lan - guage in these plans and if it complies with the minimum employment standards legislation. Inform employees of exclusionary lan- guage. Employers should also ensure that the pro- visions limiting bonus or benefit payments dur- ing the reasonable notice period are brought to the attention of employees when they begin their employment or, given this recent SCC decision, reviewed with all employees in the near future. For more information, see: • Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 (S.C.C.). Tim Mitchell practises management-side labour and employment law at McLennan Ross in Cal - gary. He can be reached at (403) 303-1791 or tmitchell@mross.com. Answer: Whether an employee working remote- ly can move to a different city without employer consent will likely depend on the terms of the employment contract or remote-work agree- ment. Just as the right or ability to work from home is an entitlement granted through the terms of an applicable contract or agreement, so is the right to work from a different city. More specifically, an employee's remote-work agree - ment does not necessarily include or imply the right for an employee to work remotely from an- other city. The employer has authority to deter- mine the location where the work is performed and this is expressed through the agreement. However, if the employment contract or re- mote-work agreement is silent on the issue, the employee may not be in contravention of their respective agreement if they decide to work in a different city. Moreover, the employee may wrongfully assume that they are permitted to work remotely from any location. This was the case in Ernst v. Destiny Software Productions Inc., where the employee had a remote-work agreement permitting him to work in Calgary for a Vancouver-based software company. The agreement did not specify the location and the employee moved to Mexico under the as - sumption that he could work remotely from there. However, the court upheld the company's decision to terminate the employee for failing to return to work in Canada when requested to do so. Another case out of British Columbia consid - ered the same issue and held that the refusal of the employee to return to work at the location specified by the employer amounted to willful disobedience and insubordination, which are grounds for termination. Further, there are valid reasons why an employ - er may want to control the location of its employ- ees. For example, depending on the nature of the business, there may be situations where the com- pany requires employees occasionally to com- plete in-office or location-specific tasks or where communication among employees requires that they operate in the same time zone. Depending on the role and responsibilities of the employee, there may also be tax implications for the em - ployer if the employee were to work remotely from a different province or country. This issue may arise where an employee has the authority to enter binding contracts on behalf of the company and has relocated to another province. In addition to the foregoing, the following practical considerations are also important: Employers should ensure that their telecom - muting policy or written agreement states the location where employees are to work. In addi- tion to specifying work expectations, these poli- cies should also include the company's stance on remote work and acceptable locations. Employers should reserve the right to deter- mine an employee's remote workplace location in any policies or agreements outlining remote- work or telecommuting. If an employee does relocate without the em- ployer's permission, the employer should first request they return to the original location prior to issuing a termination. Employers should be aware that an employ- ee who works in a different province under a remote-work agreement may be subject to that province's employment standards legislation in- stead of the legislation of the province in which the company is located. For more information, see: • Ernst v. Destiny Software Productions Inc., 2012 BCSC 542 (B.C. S.C.) Have a question for our experts? Email jeffrey.smith@keymedia.com Ask an Expert MCLENNAN ROSS, CALGARY with Tim Mitchell Remote worker moving to another city Question: If an employee with a remote-work agreement moves to a different city without the employer's consent and can't easily visit the office, can this be cause to revoke the agreement or dismiss the employee? Canadian HR Reporter, 2020 2 | | December 16, 2020 December 16, 2020 Bonuses and termination pay Question: What types of bonuses would and wouldn't be considered part of termination pay in lieu of notice of dismissal?

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