Canadian Employment Law Today

November 13, 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 November 13 2013:celt 467.qxd 13-10-25 10:56 AM Page 2 November 13, 2013 Ask an Expert with Brian Johnston Stewart McKelvey, Halifax Have a question for our experts? Email ■ EMPLOYMENT STANDARDS: Responsibility for training costs Question: If certain training, whether technical or safety, is required for an employee's job, is the employer required to pay for the training or can it tell the employee to pay for it out of her own pocket? Answer: There are two prongs to this question. Whether an employer must receive pay when engaged in required training. The answer to this question turns on whether the employee is a candidate employee or already hired. Most employment standards legislation in Canada is silent when it comes to training. Generally, tribunals agree once an employee is given specific duties to perform that benefit the employer, she becomes an employee and training required for the job becomes compensable. This is in contrast with pre-employment testing or training of a short duration, where hiring is contingent on successful completion of the testing or training. For example, in Wajid Trading Corp. v. Mohamadu, the dispute related to whether the person was compensated for training; the board concluded that time expended by an employee for training purposes is generally considered employment under the Canada Labour Code to which the minimum wage guar- 2 antee applies. Employees must receive at least minimum wage for their time spent training. Training time required by law — for example, Workplace Hazardous Materials Information System (WHMIS) training — would also qualify as work to which, at a minimum, employment standards apply, as it is a necessary condition of the workplace. Thus, an employer is required to pay at least the minimum wage rate for required training, whether technical or safety driven. Who pays the cost of actual training? This, again, is an issue that employment standards legislation is silent on, but practically, if a job requires training, most employers pay for it. Given that some training can be costly, employers may be tempted to recover expensive training costs by including a repayment clause in their employment policies or agreements. Such was the case in K.N. Umlah Insurance Agency Ltd. v. Christie, where the Nova Scotia Small Claims Court considered whether an employee was contractually bound when, after starting work for the employer that required $25,000 in training, he was presented with and signed a contract that included the following: "The employee agrees that upon termination of the employee's employment within 60 months of the commencement date, either by the employee in order to be employed by any other general insurance provider operating within the province of Nova Scotia of the commencement date or by the company for cause, then, forthwith upon written request by the company, the employee shall repay to the company the training costs as losses suffered by the company as a result of the employee's actions." Because the contract was given to the employee after he had actually started working, it was found inoperable for lack of consideration. Furthermore, the clause was found to be an unreasonable and unenforceable restraint of trade: "The basic intent of clause 6 is to bar an employee from working for 'any other general insurance provider operating within the province of Nova Scotia' for the first five years following his or her employment with Umlah Insurance on pain of having to pay a substantial amount of money to the claimant," said the court. "The practical effect is the same in either event: the employee can not work for a competitor anywhere in Nova Scotia within that five year time frame." If an employer seeks to have re-payment for certain training costs, it should ensure the employee is aware of this before an offer letter or employment agreement is signed, and ensure the repayment agreement is one that will be enforced by the court. ■ EMPLOYMENT CONTRACTS: Changes from offer letter in final contract Question: Can the employer make significant changes between a signed offer letter and the final employment contract? Answer: It is clear that any significant changes between a signed offer and the final employment offer are generally prohibited. This has generally been the law since Francis v. Canadian Imperial Bank of Commerce, where the Ontario Court of Appeal said: "The law does not permit employers to present employees with changed terms of employment, threaten to fire them if they do not agree to them, and then rely on the continued employment relationship as the consideration for the new terms." In Francis, the employer made a written offer of employment to Trusty Francis on condition of obtaining a satisfactory reference. Francis accepted the offer and the satisfactory reference was obtained. When Francis arrived for his first day of work a few days later, he was given a document to sign entitled "Employment Agreement." This document said the employer could terminate Francis without cause upon giving one month's notice for each completed year of service, up to a maximum of three months' notice. Some eight years later, Francis was dismissed. The Court of Appeal said the three months' notice Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 9

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