Canadian Employment Law Today

August 21, 2013

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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CELT August 21 2013:celt 467.qxd 13-09-16 9:50 AM Page 2 August 21, 2013 Ask an Expert with Brian Johnston Stewart McKelvey, Halifax Have a question for our experts? Email ■ EMPLOYMENT STANDARDS: Recouping used but unearned vacation time Question: What can an employer do if an employee quits or is fired and has used more vacation days than she has earned to that point in the year? Can the value of the excess days be recouped? Answer: The answer turns on whether there is an agreement between the parties for recovery of vacation days taken but not yet earned. Absent such agreement, there is little an employer can do to recover used but unearned vacation days, in both unionized and non-unionized workplaces. If there is an agreement providing for recovery on termination, the employer will be able to deduct accordingly. Most employment standards legislation in Canada prohibits deductions that are not lawful deductions (such as Canada Pension Plan and employment insurance) without the employee's consent. Some jurisdictions, however, have distinguished "recovery of overpayment" from deductions. For example, both the Ontario Labour Relations Board and Nova Scotia Labour Board have a history of cases where they have distinguished "recovery of overpayment" from other sources of deductions. The Ontario Labour Relations Board in Brown Bear Day Care v. Hollander set out the test the employer must meet to demonstrate proof of overpayment and 2 knowledge on the part of the employee. In Brown Bear, the board decided the employer had communicated a clear expectation there would be an annual reconciliation of vacation days taken and vacation days earned. When an employee took more vacation days than earned, the board determined the deduction from the employee's final paycheque was permissible. The board said the expectations set by the employer are critical to validly withholding funds as a method of overpayment recovery. However, if the employer had lulled the employee into thinking the overpayment would not be recovered, it would be a factor weighing against the employer's ability to recover those funds. "On the evidence before me, Hollander (and all other employees) were made aware well before Hollander's employment ended that there would be an annual reconciliation of vacation days taken and vacation days earned," said the board. In Nova Scotia, the board has allowed for a deduction consistent with overpayment of vacation in Mossman v. Romney & Romney, an Aug. 2, 1989, decision of the former Labour Standards Tribunal, when the employer provided uncontradicted evidence of the overpayment. That decision appears to be an anomaly with no other tribunal or board decisions considering the issue since. The uncertainty and level of proof involved in having a matter go before a board or arbitrator on this issue should cause employers to take further steps to protect themselves if they want to deduct overpayments on termination. Employers can gain protection by entering into a written agreement with the employee providing for deduction on final pay of any amounts determined to be an overpayment by the employer. Of course, such an agreement would require compliance with any other employment standard obligation (Nova Scotia does not allow a deduction that results in the employee receiving less than minimum wage for hours worked during the pay period). A typical agreement would expressly say the employee understands that excess vacation is refundable by payroll deduction of any overpayment. ■ HUMAN RIGHTS: Employee doesn't report harassment Question: Is an employer liable if an employee files a harassment complaint with a human rights commission before bringing the harassment to the attention of the employer, therefore not giving the employer a chance to act on the complaint? Answer: There is no hard and fast rule that an employee is required to report harassment to her employer before filing a human rights complaint, but if an employee does not report harassment to her employer, a tribunal or board may make unfavourable credibility findings. This was the case in Chaudhary v. Smoother Movers, a Canadian Human Rights Tribunal decision where the tribunal concluded the allegation of harassment could not be sustained. The complainant, an otherwise outspoken individual in the workplace, failed to raise the alleged harassment issue, instead choosing to go directly to the Human Rights Commission: "I find it difficult to reconcile the complainant's allegations with the fact that he never raised any of those allegations with his employer. He claims Mr. Bensley is intimidating and not approachable, and he was hesitant to raise the issues in fear that it might affect his employment. Despite this assertion, the complainant was able to confront his alleged harassers about their conduct," said the tribunal. The tribunal noted there may be sensitivities and challenges for an employee that may prevent a complaint to the employer, and in those instances, failing to report is not in itself suggestive of fabrication. However, in Smoother Movers, the evidence showed the employee was generally outspoken on other issues that could be characterized as "sensitive" (such as negotiating his pay). With this evidence, it was difficult to support the assertions by the employee that the employer was intimidating or not Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 7

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