The law may favour employers but courts are stepping in to protect employees
Employers must be cautious and avoid being opportunistic, Howard Levitt writes.
The impact of employment law has never reverberated as broadly as now with millions of Canadian employees laid off, dismissed, or their hours, or salaries reduced. Many employees are surprised at the extent to which the law favours employers and asked, in the many emails I have received, what statutes provide for wrongful and constructive dismissal law.
The answer: none. Most employment law doctrines have evolved, not from statute, but from years of jurisprudence and have long surpassed the minimum provisions of employment standards legislation, which have been rendered meaningless for most. Our courts, led by the Supreme Court of Canada in developing the law, have considered it necessary to protect the interests of employees.
That’s because they have found there to be an inherent inequality of bargaining power between employers and employees, which they consider the responsibility of the law to redress.
To understand why the law has come to such conclusions, it’s instructive to read what that court has said on these issues.
As the Supreme Court found, in a case in which I successfully acted, Machtinger v HOJ Industries Ltd.
“Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being. Not only is work fundamental to an individual’s identity, but also that the manner in which employment can be terminated is equally important.
... individual employees, and in particular non-unionized employees, are often in an unequal bargaining position in relation to their employers. As stated (in one academic paper),
... the terms of the employment contract rarely result from an exercise of free bargaining power in the way that the paradigm commercial exchange between two traders does. Individual employees on the whole lack both the bargaining power and the information necessary to achieve more favourable contract provisions than those offered by the employer.”
In another decision, the Supreme Court went on to state: “This power imbalance … informs virtually all facets of the employment relationship. (T) he relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation it is a condition of subordination ...
“The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal.”
Reading those passages provides insight as to the intended purpose of much of employment law and of how the law is interpreted by our courts.
Continuing with this theme, in the past few months Canadian courts have voided most termination provisions in employment contracts and found that other punitive clauses in such contracts must be adequately pointed out to employees in order to be later enforceable.
I participated in government sessions where the legislation extending layoffs in Ontario during this state of emergency was discussed and, without revealing any secrets, it was made clear that it was not intended to remove the rights of laid-off employees or those with reduced incomes to sue for constructive dismissal.
With respect to such lawsuits, the law historically provided more severance to employees whose jobs will be difficult to replace yet denied recognition, in reduced severance, to employers’ impecuniosity and inability to pay. That is a harbinger of potentially higher periods of severance being awarded to terminated victims of COVID-19.
But there is a disconnect between the legislative and judicial preparedness to protect employees’ interests and their own timorousness. A very small percentage of laid-off employees, let alone those who kept their jobs but had their salaries reduced, have sued. They feared severing their relationship with their employer in case the downturn was permanent and they became unemployable. Many may sue yet, if they are never recalled or if their colleagues are recalled but not them. Or if the job market returns and becomes ebullient once again, as it’s showing signs of doing, and they become less concerned about burning bridges with an employer that sent them home for months without pay. All indications are that those lawsuits will receive very favourable considerations from the courts.
And companies, as I have cautioned my clients, must be cautious. Courts will have little sympathy for employers that opportunistically, for example, require laid-off employees to sign new contracts giving up their legal rights in return for being recalled. Or who reduce employees’ wages and then, when later firing them, pay severance at the reduced amount.
Employers have been fortunate but the law itself is against them. They must proceed intelligently and with caution rather than being opportunistic in the face of employee fear.