Canadian Employment Law Today

with Tim Mitchell Ask an Expert MCLENNAN ROSS LLP CALGARY Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Canadian HR Reporter, a Thomson Reuters business 2019 2 | April 3, 2019 Tim Mitchell Ask an Expert Bad-faith dismissal with generous severance package Question: If an employer provides a terminated employee with a severance package more generous than the common law entitlement, can it still be at risk of liability for bad-faith conduct in the manner of dismissal if the employee is unhappy with the way the termination was handled? Work-from-home requirements in bad weather Question: If some employees are provided with laptops, can they be required to work from home when the office is closed due to bad weather, while employees in similar positions who haven't been given such equipment don't have to work? If the employees are paid by the hour, are there risks to reducing the hours and therefore pay of the latter group because of bad weather? Answer: e decision to close a business for the day due to bad weather rests solely with the employer. When faced with severe weather conditions, an employer has to bal- ance the disadvantages of losing a day's work against requiring employees to commute in potentially hazardous conditions. Whether employees are required to work remotely or telecommute, and whether employees will be compensated for days when the offi ce is closed due to inclement weather, are large- ly issues that are determined in an employ- ment contract or in workplace policies. Generally, an employer will not be re- quired to pay employees for days that the offi ce is closed. e foundation of an em- ployment relationship is that an employee trades her services to an employer in ex- change for compensation. Subject to cer- tain exceptions (such as a written policy, agreement or the provision of a collec- tive agreement), as long as the employer informs employees before they report to work, the employer is not obligated to pay them on days when they are not providing services due to an employer's decision to close the offi ce for the day. However, when an employer does not provide suffi cient notice of an offi ce closure, it may still have to pay some compensation in accordance with provincial employment standards legislation. For example, under the Employment Standards Regulation (Al- berta), most employees must be paid at least three hours of pay at the minimum wage each time they report to work even if they are sent home after less than three hours. Overall, an employer should set clear guidelines as to whether employees who are provided with laptops are required to work from home when the offi ce is closed due to bad weather. at decision may, in large part, depend on the type of position and responsibilities of a given employee. Im- portantly, employees that are not required to work for the day are not entitled to com- pensation (unless the employee reports to work prior to the offi ce closure as described above). Further, employees are not entitled to pay merely because other employees have the opportunity to work. Notwithstanding, employers should be aware that restricting the ability of some em- ployees to work at home (and thus, receiving pay when the offi ce is closed) may give rise to complaints of favouritism or low employee morale. us, at a minimum, employers should develop a severe weather or busi- ness closure policy addressing the following questions: • Will employees be paid if severe weather prevents them from coming to work? • If not, can employees use their vacation (or other paid time off ) to off set the loss? • Which employees are/will be required to work from home? • How will the closure be communicated to employees? • If the business is closed for the day, will the employees receive any compensation? e policy should be uniformly applied and the employer's exceptions in inclement weather circumstances regarding work and compensation should be communicated to employees. Tim Mitchell practices management- side labour and employment law with McLennan Ross LLP in Calgary. He can be reached at (403) 303-1791 or tmitchell@ mross.com. Answer: An employee's entitlement to some combination of statutory termina- tion and severance pay, common law rea- sonable notice, or pay in lieu thereof (col- lectively, "severance entitlement"), is often the central issue at the time an employee is dismissed without cause. However, an employer also has an obligation to conduct the dismissal in good faith and in a man- ner that is "candid, reasonable, honest and forthright with their employees." A fail- ure to act in good faith in the dismissal pro- cess may justify an award of bad-faith dam- ages in excess of any severance entitlement. For example, a bad faith dismissal could include the following scenarios: • e employer makes declarations that re- sult in an attack on the employee's reputa- tion at the time of the dismissal. • e employer misrepresents the reason for termination. • Dismissal with the intent to deprive the employee of a benefi t, such as a pension. Historically, the penalty for breaching the good-faith obligation was an increase in the length of the reasonable notice pe- riod. is payment was colloquially called the "Wallace bump" after the Supreme Court of Canada (SCC) decision Wallace v. United Grain Growers Ltd. However, in 2008, the SCC clarifi ed how bad-faith damages should be cal- culated and awarded in Keayes v. Honda Canada Inc. Following that decision, bad- faith damages, or moral damages as they are sometimes called, are now considered separately from an employee's severance entitlement and are no longer calculated by extending the reasonable notice period. e rationale underlying the Honda Can- ada decision is the fact that bad-faith dis- missals could cause psychological damage and mental distress with loss to the employ- ee. As such, instead of being simple exten- sions to the reasonable notice period, bad- faith damages are fi xed and determined by an employee's ability to prove losses due to psychological damage and mental distress resulting from the manner of dismissal. Ultimately, upon dismissal without cause, an employer is obligated to provide the employee's severance entitlement and must conduct the dismissal in good faith. Regardless of whether an employer pro- vides a generous severance package in ex- cess of what may be owing as a common law entitlement, if the dismissal is conducted in bad faith, then the employer may be sep- arately liable for bad faith damages. As a matter of best practice, when an em- ployer provides a generous severance pack- age, it should require employees to execute a full and fi nal release in the employer's fa- vour for any severance in excess of the statutory termination and severance pay amounts. e release should include spe- cifi c language releasing the employer from any claims for damages arising out of the employee's employment and termination. For more information see: • Wallace v. United Grain Growers Ltd., 1997 CarswellMan 455 (S.C.C.). • Keays v. Honda Canada Inc., 2007 Car- swellOnt 1874 (S.C.C.).

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