BY: Chris Drinovz, Mike Weiler, Ale Henao, Junki Hong

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In November 2020, Chris Drinovz and Mike Weiler presented a Professional Development webinar for CPHR BC on "The Art of Hiring and Beyond." A full recording can be accessed from CPHR BC website here. In this article, we answered the top 27 questions received during and after the webinar from HR specialists who attended.

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Employment Contracts

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1. What might be fair consideration if you want to re-write a contract with a 20-year employee to now limit their notice to 8 weeks?

Unfortunately, there are no legal principles outlining the exact amount of value or quantum an employee must receive for consideration for a valid agreement.  However, we will review some relevant case law that we consider when advising our employer clients.

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In Lancia v Park Dentistry, 2018 ONSC 751 (“Lancia”) the Court noted that there is no requirement for an employer to give an employee consideration equivalent to the amount of value the employee loses as the result of a new agreement, for example.  Absent fraud or unconscionability, an agreement will be enforceable as long as some type of consideration is exchanged.  

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Gerald Henry Lewis Fridman’s book, The Law of Contract in Canada (Toronto: Thompson Reuters Canada Limited, 2011), is regularly cited on this issue.  Fridman summarizes that the value or quantum of the value exchanged is typically irrelevant (page 90). That being said, the courts will scrutinize consideration that appears to be artificial and look to the intention of the parties when the agreement was made to make this determination.

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Courts have provided some indication as to what is sufficient and insufficient consideration.  A one-time bonus is deemed sufficient consideration for the variation of an employment contract (Lancia).  Consideration does not need to be financial, there are some interesting cases that found sufficient consideration in added value to a worker.  In one, a favourable working environment was found to be sufficient consideration for the variation of an employment agreement (United Rentals of Canada Inc v Brooks 2016, ONSC 6854).  In another, permitting an employee to telework was also found as sufficient consideration (Riskie v Sony of Canada Ltd, 2015 ONSC 5859).

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There is also some legislative indication for particular fields.  The Bankruptcy and Insolvency Act defines adequate value of consideration as fair and reasonable money value with relation to the known or reasonably to be anticipated benefits of the contract, dealing or transaction.

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Given the recent case law developments  including the Uber Supreme Court of Canada decision the concern here is that unconscionability will become more important so minimal consideration we think would be risky whereas more reasonable consideration will help employer (in the form of a one time bonus, raise, more favourable work conditions or a combination).

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2. Should the employer have an employment contract specifically for the probation period and then once hired permanently an employment contract at that point?

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There should be a probation period and then a provision for termination after the probation.  The provisions would normally be in the same contract. Employers are advised to use the probation period to actually test the suitability of the employee.  It is both the employer’s and employee’s interests to make sure the employee is a good fit.

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The contract in BC can provide that during a 3-month probation the employer can dismiss for lack of suitability without notice or pay in lieu.  After 3 months, the Employment Standards Act (“ESA”) be complied with and a minimum one weeks’ severance must be provided.  Generally, the probation period is the three months but if an employer wants a longer probation period they can choose for example a 6 months’ probation. But keep in mind, regardless of the length of the probation period once the 3 months passed the employee is entitled to the minimum notice or pay in lieu under the ESA.

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3. Can we renew contracts with employees to accommodate changes in the Employment Standards Act?

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This depends on the changes you would like to make and the effect that would have on the employee’s rights - are you now limiting termination pay through your changes? If so, see answer from Question 1.

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4. Is it legal to cut % of the salary if an employee works from home? What % is reasonable?

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If employee is agreeable: When reducing a salary (or making any changes to an employment contract – whether written or verbal), employers should try to get the employees to accept the change (in this case a reduction). Such an agreement should be in writing and may well constitute a defence to a potential future constructive dismissal claim. Further even in the absence of a written agreement if the employee continues on in the employ under the altered terms without complaint then likely she will have been found to have condoned the change.

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However, if employers simply want to unilaterally impose a change (i.e. wage cut) then they run the risk of creating a constructive dismissal. A constructive dismissal will occur when an employer unilaterally imposes a fundamental change to employment terms or otherwise changes fundamental terms. The courts ask whether the conduct evinces an intention on the part of the employer to no longer be bound by the employment contract.

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While pay and benefits are clearly central to the employment relationship it is clear that some reductions in remuneration will not constitute a constructive dismissal. In Pavlis v HSBC Bank Canada 2009 BCSC 498 the court considered how big a decrease in pay would have to be to constitute a constructive dismissal. Generally the court stated that a reduction in salary of up to 10% would not be a fundamental breach; a reduction 14—17 % may amount to a fundamental breach if another significant or substantial unilateral change occurs and any reduction beyond 20% will on its own will be a fundamental breach.

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Again these cases will have to be decided in Post COVID world. If the change does not constitute a constructive dismissal an employee may have a right to claim wages under the ESA which now provides that claims can go back 12 months.

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5. We are rolling out new employment agreements b/c ours does not have a terminations clause. What is a reasonable amount of fresh consideration? Can we tie this in with salary increases or year end bonus?

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Yes, you can. See answer to Question #1 re: consideration and ensure you have a properly drafted termination clause that will hold up in court (language is very important and ensure the correct specific provincial legislation is referenced).

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6. If you have senior employees that were not hired with a written only verbal contract is there a way to now draft a contract and have the employee sign going forward? i.e. if the employee has many more specific responsibilities than when they were first employed

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To hold a written agreement executed by an existing employee valid, fresh consideration (i.e. value to the new commitment) to the employee is required. This is because as we modify existing terms and clarify the employer's expectations about matters such as termination, confidentiality, competition, solicitation and etc., the employee and the law would consider this as a new employment agreement. For more details please read answer to Question 1 above.

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7. What happens if an employee refuses to sign an updated employment agreement (adding termination clause) with fresh consideration?

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An employer has two options in dealing with an employee who refuses to accept a change to his or her terms of employment:

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1. The employer can acquiesce to the employee’s refusal, meaning that the original terms and conditions of employment will continue to apply; or
2. The employer can terminate the employee with proper notice and then offer re-employment on the employment contract it seeks to implement.

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Terminated employees have a duty to mitigate their losses, so if they refuse the new terms once terminated and then bring a wrongful dismissal claim against the employer, the refused job can be used to reduce their wage loss damages (as they could’ve had a similar employment but didn’t accept it).

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These cases can be tricky so we highly recommend you consult with an experienced employment lawyer.

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8. Looking to set up a company with the aim of supplying janitors to go work for my clients on an hourly basis. The janitors will essentially be doing the job of home cleaning and I intend to hire them as contractors who will be paid for the hours they work. What will be the labour law requirements.

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Please read our recent article which summarizes the law around this very issue here. Our advice re: independent contractors is usually that such arrangements are fraught with danger as courts and tribunals will find in many cases that the person is both in fact and in law an employee and not an independent contractor notwithstanding what the written agreement says. This is because independent contractors have their rights significantly limited when compared to employees.

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We highly recommend that you contact an experienced employment lawyer to ensure your contract reflects (as much as it can) a true independent contractor relationship.

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9. When you have employees on fixed term contracts, are you able to lay them off without having to pay out the remainder of their contract (ie: during Covid19), if there is no language around that in the original agreement?

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In any employment relationship, absent seasonal work and the right to lay-off being included in a written contract, any temporary layoff is generally treated as a constructive dismissal under the common law, triggering the employer’s severance pay obligations.

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A further danger with fixed-term contracts is that the employer agrees to retain the employee for a fixed period. Even if the employer needs to terminate the employee, it must pay them the remainder of the contract unless the contract has a termination clause.

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Policies

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10. Can you please expand on best practices of the "use it or lose it" vacation policy?

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I believe this was in the context of what terms might be in the contract signed at hiring.  Most employers want their employees to take their allotted vacation.  It avoids accumulating debt and most importantly employees should in my view use their vacation to hit the refresh button.  So generally we recommend that employees be required to take their vacation each year with a usual exception being to allow them to carry over a maximum of one or two weeks each year.  If they do not use their vacation beyond the Employment Standards Act (“ESA”) minimums then they run the risk of losing them.

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Many employers provide for vacation and vacation pay well beyond the minimum standards in the ESA.  This is especially true of senior managers.  The problem can be that those managers do not take their allotted vacation and often no one is checking them.  So they keep track and then for example at the time of termination they claim a huge amount of vacation pay.  I had a case where the CEO of a large financial institution was being let go and after the parties had negotiated the usual severance terms the CEO claimed he had over $150,000 in vacation pay owing.  For some reason such continuing liability was not recorded and there were no accurate company records.  The case got settled but it is a reminder to be on top of vacation time and pay.

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11. What are the best methods for employee input when creating or changing an employee handbook?

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This really depends on your organization, the size of your workforce, and the nature of the changes you are considering. One option is to send out a survey to all employees regarding the topics proposed to be changed to canvas interest and general attitude; you can then follow up with individual employees as necessary to discuss and request further input for consideration. Other options may include holding a townhall meeting with employees or creating a committee responsible for amending the handbook, which can include an employee representative.  

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Terminations

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12. Could you let us know what case the 1 million dollar wrongful dismissal claim referenced in the intro was?

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The case we were referring to where an employee was awarded 1.1 million after being terminated is:  Matthews versus Ocean Nutrition Canada Ltd. 2020 SCC 26. We summarized the case in a blog article available here.

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Interviews & Human Rights

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13. For the interview question regarding being able to lift x lbs on a regular basis - does the employer have a duty to accommodate if there is a job requirement to lift weight but there may be accommodations possible?

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The question is whether someone is excluded because they cannot meet the job requirement.  Generally, if a requirement is a bona fide occupation requirement (meaning a requirement that is necessary for the performance of a job), an employer can choose not to hire an applicant who can’t satisfy the requirement. If an applicant makes a human rights complaint, then you would have to satisfy a human rights tribunal that the requirement was necessary for the proper performance of the job.

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Where an existing employee is injured and can no longer meet the lifting requirement due to a physical disability, the employer has a duty to accommodate that employee, up to the point of undue hardship. The concept of accommodation up to undue hardship is too complicated to explain in this answer but it may involve creating a modified work schedule, modified duties, or providing other accommodations for the employee. Usually, the duty to accommodate does not require the employer to create a new position for the employee, but may require transferring duties between employees.  

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14. By using virtual interviews, Zoom, there is a record option. Should or is it recommended to record or not record? as well as with virtual the candidate may be recording. Thoughts around that.

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In an interview setting, both the interviewer and the interviewee can record the interview as long as the parties to the conversation consent. On whether to record, we first suggest that you think about why one would want to record. Our initial thoughts go to the possibility of a complaint and admission of the recording as evidence in support of or defence against the complaint. On the other hand, the interviewee or interviewer may want the recording just for training purposes.

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In practice, we would suggest that you bring up your expectation about recording as part of the interview process and confirm consent at the beginning of the interview.

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As for being recorded, depending on the program you use to set up the interview you might have settings available to only allow the host (you) to record. However, you wouldn’t be able to know if the interviewee recorded you unless this is an issue later on. In any event, we suggest that you act and conduct the interview in good faith and be sure to take good notes.

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15. What would be the best way to ask during the interview about the applicant's work visa or immigration status?

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We don’t recommend any specific references to citizenship/immigration status or country of origin, but rather a more general question such as “Are you eligible to work in Canada?”

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You’re not strictly prohibited from asking questions regarding citizenship. That said, employers who do ask questions based on Code-protected grounds risk exposing themselves to significant liability, particularly in cases where the job applicant is not successful (as in the Imperial Oil case we reviewed).  

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In our view, it is permissible to ask and require that new hires be eligible to work in Canada at the time of hiring, but to require permanence may be discriminatory under human rights legislation as was found in the Imperial Oil case.

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16. Is there any concern with asking candidates for their current compensation and compensation expectations and presenting this in writing to the hiring manager (list of all candidates with their current and expected compensation)?

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You can ask candidates for their current compensation, however keep in mind that some might be obligated under their current contracts to keep their salary confidential. In that case, you shouldn’t insist they answer that question.

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There is no issue with providing current and/or expected compensation for candidates to the hiring manager, but keep in mind this information should be kept private otherwise.

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Reference Checks

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17. I find candidates are now more hesitant to provide the current employer reference. What do you advise?

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A candidate might refuse to provide current employer references especially if they have not yet given notice. In these cases, you can discuss and canvass whether there is someone at their current work in a more supervisory or senior role who might be comfortable providing the reference (non management).

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18. Many companies only provide proof of employment (i.e. start date/end date) or basic facts like job duties.  How do you go about getting a reference in that case? Is this a trend, is it getting harder for employers to get references?

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Yes, based on the many questions received on this topic, it appears a lot of employers are having trouble getting more than just basic facts from past employers.

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Here are some suggestions:

• Prepare specific questions to ask during the reference call – it would be harder for the past employer to not give you any information if you are asking direct questions versus if you just ask them to tell you about their past employee, or if you ask about any concerns;
• Consider whether the lack of information is a red flag – generally (but not always) if a good employee leaves an employer on good terms, they would likely get a proper reference;
• Address the lack of information with the potential candidate (either before calling the references or after), and see if they would be willing to go back to the reference and ask them to provide more details – this might not always be an option;
• Ask the potential candidate for additional references willing to share more details.

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Some employers might simply not be aware of the principle of qualified privilege and want to be cautious: but as long as you’re acting in good faith when providing an honest reference, you are likely protected from liability for any statements you make.

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19. Should we be conducting reference checks for entry-level positions as well? Even for retail Sales Associates?

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Yes, we highly recommend conducting reference checks prior to hiring any employee, regardless of their position. Even entry-level employees have the potential to cause significant damage to the business or its reputation, so you want to do your best to know who you’re hiring. If there are no references that can be contacted, at minimum a Google Search should be done.

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20. When you say check all references, are you saying call all employment on their resume?

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Yes, we recommend at least calling all the references listed, but also calling all past employers listed on the resume.

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21. Does qualified privilege also apply to past co-workers or just supervisors/managers? Do you know if the same protection applies in all provinces when giving references and being candid and acting in good faith?"

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Yes, it applies to anyone giving a reference on behalf of the former employer.

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We relied on British Columbia and Ontario case law regarding the qualified privilege principle. However, these principles come from the common law defences to the tort of defamation which may apply across Canada. That being said, each province interprets the law differently and we recommend following up with a lawyer in your particular jurisdiction.

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22. How can you vouch if the references provided by the candidate are reputable?

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You can’t know for sure, but you can do your due diligence to check out the references provided by a candidate. Take a look at the company’s website and their team, and include some questions inquiring what their work relationship was, if the candidate worked directly with them, how long did they work together etc.

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23. In regards to reference check: are you allowed to ask questions such as “were there any concerns during the employment period for the candidate?” or “why did the candidate leave their previous employment?” What are you allowed to ask and NOT to ask?

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Subject to human rights and privacy legislation, you are allowed to ask any question that pertains to the suitability of the potential candidate for the job. To tie this back to one of the questions above, keep in mind that open questions like that require the other person to work to put together an answer. Asking more direct questions instead would be a better practice and usually yields more material information – don’t try to make them do your job for you; some examples include:

• Instead of “were there any concerns during the employment period for the candidate?”
• Consider asking: “was the employee punctual?”, “was the employee reliable” , “did the employee get along with other team members?”
• Then at the end you can ask as final scoop: “is there any reason I shouldn’t hire this person?”

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24. We always get permission to check references first. With respect to checking past employers not listed, you had mentioned we could do this but had to notify the candidate. Do we need the candidate's permission?

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You don’t need to notify the candidate that you will be contacting past employers not listed as references, however it is recommended you do so. You don’t need their permission, however the unlisted employer may not have the employee’s permission to disclose any personal information.

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Similarly, if you receive a reference call for a past employee and you don’t have prior notice or permission to disclose information regarding that employee, you should not be discussing any personal information to another employer until you get permission.

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25. Do candidates have a right to see written reference reports and the name of person who gave the reference?

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An individual can make an access to information or personal information request for any records containing their personal information. This may include notes or documents from or regarding references. However, the requesting individual would not be entitled to information which identifies parties other than themselves, including the third party who provided the reference. So, if you receive such a request, it is necessary to redact the personal information (including name) of anyone else mentioned in the notes. If you’re unsure how to proceed, you can contact our Employment Group for legal advice.

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Similarly, if you receive a reference call for a past employee and you don’t have prior notice or permission to disclose information regarding that employee, you should not be discussing any personal information to another employer until you get permission.

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26. What information from Google or Social Media would be grounds to not hire someone?

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In this day in age you can find a multitude of information about an individual on social media or Google in general. Some information you might find could include a characteristic or behaviour that would not align with your organization’s culture and values. Maybe you come across an article they wrote in the past that goes against the type of person and image needed for the specific position, or maybe they leave public posts/comments that are unprofessional or discriminatory on social media posts or news channel posts.

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One big caveat is to keep in mind that you can’t refuse to hire someone based (even partially) on a human rights ground or you will open the employer up to the danger of a human rights complaint.

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Another caveat is privacy – you can search and access public information, but if the candidate has private social media account(s) you should not try to obtain access through someone else’s account or create a fake account to friend them. This could result in serious privacy violations and liability for you and/or the company.

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HR & Covid-19

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27. Any comment on a most commonly missed by HR practice or policy you can share or comment in relevance to covid-19 infection control?

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We’ll give a non-legal answer to this one, as most businesses have been following recommendations from WorkSafeBC or other workers compensation authorities quite well – one of the main practices that can prevent infection in the workplace is open and consistent communication with your employees combined with proper daily assessments of employees prior to entering the workplace. We prepared a Screening Form that you can access here. Note that this Form is based on the applicable health orders in British Columbia and may not be compliant in other jurisdictions.

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This is a very stressful and trying time for everyone, and the extended length of the pandemic has been especially tough on some. There are people (employees) who might be watching the news daily and reading all the updates from the government, but there are also others who can’t always follow the news or updates. This is why it is really important that the employer keep everyone informed, encourage working remotely where possible, highlight the importance of both at work and outside of work behaviour and communicate the possible consequences for all if employees are not diligent in following government health orders.

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Note to our Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter, please contact our Employment & Labour Group.

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