By: Chris Drinovz and Japreet Lehal

In our first blog post of 2019, we look back at some of the key cases and developments in BC employment law for 2018.

5. BC Human Rights Commission Re-Established

In November 2018, the provincial government introduced Bill 50 – Human Rights Code Amendment Act, 2018, which re-established a BC Human Rights Commission. The Bill received Royal Assent on November 27, 2018. For more than a decade and a half, BC did not have a Commission. Prior to this recently introduced legislation, BC was the only province in Canada without a human rights commission, after it was ended in 2002 by the provincial government of that time. The Bill follows the 25 recommendations that were outlined in the report of Ravi Kahlon, Parliamentary Secretary for Sport & Multiculturalism along with 8 weeks of public consultation.

The amendments create an independent human rights commissioner and office with a mandate to promote and protect human rights in the province. Under section 47.12, the commissioner is given broad powers to further this mandate including the ability to intervene in Tribunal complaints, create and develop guidelines for institutions, publish reports and make recommendations, deliver public education, support research, and consult with organizations regarding human rights issues.

We will be closely monitoring how the Commission is rolled out this year and look forward to seeing how it begins to address systemic injustices and patterns of discrimination proactively.  To view Bill 50 – Human Rights Code Amendment Act, 2018, please visit the following link: https://www.leg.bc.ca/parliamentary-business/legislation-debates-proceedings/41st-parliament/3rd-session/bills/third-reading/gov50-3

4. Shorter is Better?

A series of reasonable notice cases involving short-service employees has reinforced the notion that a lengthy tenure is not absolutely crucial to receiving a longer reasonable notice period. These cases included:

• Greenlees v. Starline Windows Ltd., 2018 BCSC 1457: a 43-year-old salesperson was entitled to six months reasonable notice after only six months of employment. Important factors included the limited availability of alternative employment, made even worse by the employer’s failure to provide a reference letter. We note that inducement was also a factor. 
• Corey v. Kruger Products L.P., 2018 BCSC 1510: A 58-year-old maintenance supervisor received eight months’ reasonable notice after working only 2.5 years. Key factors were his age and unavailability of similar employment despite diligent search efforts. 
• Chapple v. Big Bay Landing Ltd., 2018 BCSC 1666: A 61-year-old resort manager received nine months reasonable notice after working for just over two years. Again, age was a factor, along with the specialized nature of the work. 

To read more about this issue, please click on the link to our blog post titled, Increased Reasonable Notice Period for Short Service Employees.

3. Employment Standards Amendments Recognize Changing Workplace

British Columbia’s Bill 6, Employment Standards Amendment Act, 2018 received Royal Assent on May 17, 2018, and came into force on that day. The amendments to Employment Standards Act include a longer period of job protection for pregnancy/parental leave, an increase of the available time for compassionate care leave, and two new unpaid job-protected leaves (for eligible employees upon the disappearance of a child due to a suspected crime and upon the death of a child under 19 years of age for any reason).

Even more significant amendments to British Columbia’s employment standards legislation are in the works. In 2018 after much consultation, the BC Law Institute released its Report on the Employment Standards Act. The report is the final publication in connection with BCLI’s Employment Standards Act Reform Project, which began in 2014 and is the first comprehensive, independent review of the Act since the early 1990s. 

The 300-page report contains 71 recommendations for changes to the Act to address contemporary and evolving circumstances in the 21st-century workplace. The introduction to the report provides the following interesting comments in this respect: 

“Today’s workplace is markedly different from the workplace of the mid-to-late twentieth century. Digital technology, changes in the composition of the workforce, and competitive pressures resulting from globalization, among other factors, have transformed the working world. Long-term, relatively secure full-time employment has increasingly given way to less secure temporary and part-time employment. New kinds of working relationships strain the boundaries of the traditional categories of “employee” and “independent contractor.” There is pressure from employers and employees alike for greater flexibility in patterns of work. These paradigm shifts make the revision and modernization of legislation governing the workplace timely and essential.”

You can review the Report on the Employment Standards Act here. We will continue to carefully monitor the legislature to see how many of the proposed changes are implemented into law.  

2. Duty of Good Faith Expands

The duty of good faith and honest performance in the execution of contract duties has continued to expand since the Supreme Court of Canada laid new ground in the Bhasin case. This is now one of the most exciting and fruitful developing aspects of employment and employment-like contract analysis. An interesting precedent from Ontario was set in 2018 and is becoming influential in this province as well.

The case of Mohamed v. Information Systems Architects Inc. 2018 ONCA 428, actually dealt with a six-month independent contractor arrangement (ICA) between the plaintiff, Mr. Mohamed and Information Systems which was an employment-like relationship. Prior to signing the ICA, Mr. Mohamed had disclosed the fact that he had a dated criminal record arising from an incident in high school. Information Systems engaged him nonetheless after he passed security checks. One month into the engagement, Mr. Mohamed was sent to work for Canadian Tire, a client of Information Systems. Canadian Tire found out about Mr. Mohamed’s past and requested that he be removed from the job due to their internal policies. Information Systems, in turn, terminated Mr. Mohamed under the ICA on the basis of his criminal record relying on its language which gave them nearly unfettered discretion to terminate the agreement.  

The appeal court found that terminating Mr. Mohamed’s engagement after he had disclosed the criminal record and passed the security checks only one month earlier was not a good faith exercise of the company’s rights under the termination clause. As a result, Mr. Mohamed was entitled to damages equivalent to what he would have made in the remaining five months of the term of his engagement. 

Mohamed was applied in BC in Lightstream Telecommunications Inc. v. Telecon Inc., 2018 BCSC 1940. This case involved a commercial but employment-like relationship between two contractors whereby the defendant Telecon had accused one of the plaintiff’s key workers of stealing tools and had terminated the agreement as a result. A proper investigation would have revealed that the worker had in fact not stolen the tools but signed them out in accordance with the accepted procedure. Madame Justice Russell found that the defendant’s lack of a thorough investigation into the matter and consideration of unreliable evidence constituted a breach of its duty of good faith as follows:

[104] I am guided in this analysis by the reasoning in Mohamed v. Information Systems Architects Inc., 2018 ONCA 428. In that case, a contractor disclosed his criminal record before he signed an Independent Consulting Agreement (the “ICA”) with a company. A month into the contract, one of the company’s clients found out about the contractor’s criminal record and requested that the company remove the consultant. The company did so without trying to secure the customer’s agreement to continue the project and subsequently did not consider the contractor for any other roles before terminating the ICA. The Court of Appeal agreed with the trial judge that this lack of effort in finding any solution other than outright dismissal was a breach of the company’s duty of good faith. I would likewise find that Telecon taking no steps to find a solution other than Wray’s permanent removal, let alone consider such a solution, was a breach of their duty of good faith.

[105] I accept that the allegation of theft was sufficient to remove a subcontractor from the load for fear that the allegation would reflect poorly upon Telecon to Telus, pending a thorough and careful investigation by Telecon. I accept that Telecon’s business is premised on the honesty and integrity of its subcontractors because Telecon’s business viability is reliant upon Telus providing it work. Telus’s performance requirements are stringent and the possibility of theft by a subcontractor could be prejudicial if no action were taken. However, the lack of any such subsequent thorough and careful investigation to justify Telecon’s continued position that it would not work with Wray ran directly against their duty of good faith.

[106] Telecon did not allow Lightstream to meaningfully present its case as to why Telecon should reconsider its position. Telecon did not appear to justify its position at all to Lightstream other than to say that theft was a serious matter. I find that Telecon’s lack of any accountability for its investigation to be rooted in a lack of good faith. Telecon relied upon unreliable evidence and was unreasonable in their justification for permanently removing Wray from the load.

The implications for employment law as this doctrine develops are enormous. These decisions suggest that employers may need a good faith reason to terminate a contract and in order to rely on a termination clause.  The threshold for what constitutes a good faith reason for termination remains unsettled. Can an employer terminate an employee because they are not a “good fit” for the company? Will the employer have to prove the employee was not a good fit?

This decision adds an additional layer of uncertainty to the enforceability of termination clauses in employment contracts.  For now, what is clear is that employers need to carefully consider their reasons for termination, regardless of the existence of an enforceable termination clause. 

1. Radical Change to the Law of Consideration

Coming in at number one is the extraordinary change to the law of contract determined by the BC Court of Appeal in Rosas v. Toca, 2018 BCCA 191 [Rosas]. While not an employment law case, the implications for employment law are far-reaching. Rosas won a $4.163 million lottery. She loaned her friend, Toca, $600,000 interest-free and requested a pay-back of the loan in a year. Seven years later, Toca had still not repaid the loan and as her friend, Rosas had repeatedly agreed to extend the loan an additional year. Finally, Rosas finally demanded it back but Toca would not pay. Rosas sued Toca, but Toca argued that the applicable six-year limitation period had elapsed. In particular, she said the gratuitous extensions for payment she received did not constitute an amendment of the original contract as no fresh consideration had been provided.

Chief Justice Bauman, for the BC Court of Appeal, canvased the evolution of the doctrine of consideration in contract law and decided that fresh consideration is no longer required to vary the terms of an existing contract. Essentially, the Court was of the view that the legal requirement for consideration has been so rigidly applied that it has created room for injustice. The application and formality of an artificial rule like consideration can no longer be used as a tool to allow parties to avoid their legal contractual obligations:

[183] …When parties to a contract agree to vary its terms, the variation should be enforceable without fresh consideration, absent duress, unconscionability, or other public policy concerns, which would render an otherwise valid term unenforceable. A variation supported by valid consideration may continue to be enforceable for that reason, but a lack of fresh consideration will no longer be determinative.

The enforceability of such variations remains subject to the usual defences of duress, unconscionability, and public policy concerns of course.

While not yet considered in an employment law context, Rosas has potentially far-reaching implications. Consideration has always been required to support changes made to an employment contract during employment. For example, an employer cannot enforce a change to an employment contract such as the introduction of a limitation on severance pay or non-competition covenant, unless it has given fresh consideration to the employee in exchange. It will be very interesting to see if the special considerations present in an employment law relationship such as the power and resource imbalance between employer and employee will influence the interpretation and application of Rosas going forward.   

If you are an employer or an employee seeking advice regarding your employment relationship, the Workplace Law Practice Group at Kane Shannon Weiler LLP would be pleased to speak with you. Please contact us at [email protected] or 604-746-4357.