Labour Employment Quarterly

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                  McCarthy Tétrault Co-Counsel:
             Labour & Employment Quarterly
                                        March 2007

                                      Brian P. Smeenk

                                          Karen Bock
                                       Jenifer Gentle
                                    Karen M. Sargeant
   Labour & Employment Quarterly
                Volume 1, Issue 1

Welcome to the inaugural edition of McCarthy Tétrault’s Labour and Employment Law Quarterly.
This publication will provide you with useful summaries of key developments in the area of labour and
employment law across Canada. Published on a quarterly basis, it will familiarize you with the changes
in the law that you need to know about.

This publication replaces our Report on Canadian Labour and Employment Law, which was distributed
to our clients periodically. With a more regular publication schedule, we aim to help keep you well-
informed of developments across Canada.

In this issue, Rosalie Cress of our Vancouver office updates you on an important case in which the
Supreme Court of Canada ruled that damages for mental distress might be awarded in breach of
contract cases. Since many employment cases involve alleged breaches of the employment contract
or union agreement, this is an important development. Rosalie also provides you with an update as
to how the courts in B.C. have been applying the law regarding “Wallace damages,” where bad faith
is alleged in termination situations.

We also give you an overview of major, recent changes to Ontario’s Human Rights Code and an Ontario
update on the issue of drug-testing. You will also find an interesting article by Pierre-Étienne Morand of
our Québec office concerning the extent to which your right to close your business, in whole or in part,
may be restricted under the law of Québec.

McCarthy Tétrault is proud of our ability to serve your needs in relation to labour and employment
issues right across Canada. We continue to strengthen an already strong team, having recently
announced the addition of Paul Boniferro and Michael Ford to our Calgary office. In Ontario, we have
a group of human rights lawyers who are focussed to serve your needs as human rights issues become
more pressing and pervasive under the amended Human Rights Code. Our human rights lawyers deal
not only with employment issues, but also with human rights issues as they may affect your business
more generally, including in the provision of services, accommodation and otherwise.

Brian P. Smeenk
March 2007
Table of Contents

National Report .................................................................................... 1
   $20,000 for Mental Distress Awarded for Breach of Disability Insurance Contract ........... 1

Ontario Report ..................................................................................... 3
   Province Moves to Modernize its Human Rights Legislation ....................................... 3
   Random Drug Testing: Dignity and Privacy of Workers vs. Increased Safety Goals? .......... 5

Western Report .................................................................................... 7
   When Will You be Responsible for “Wallace Damages?” ........................................... 7

Québec Report ..................................................................................... 8
   Can You Go Out of Business? ........................................................................... 8

Immigration Corner ..............................................................................10
   Work Opportunities for Foreign Students........................................................... 10

Quarterly Tip ......................................................................................12
   Statutory Termination Payments and ROEs: Getting the Timing Right ......................... 12

Co-Counsel: Labour & Employment Quarterly — March 2007
National Report
                                                             Ms. Fidler sued the insurer for breach of
$20,000 for Mental Distress
Awarded for Breach of Disability                             the insurance contract. She argued that the
Insurance Contract                                           insurer had wrongfully terminated her long-
                                                             term disability benefits. One week before trial,
By Rosalie Cress                                             the insurer offered to reinstate Ms. Fidler’s
                                                             benefits and to pay all arrears with interest. As
In Fidler v. Sun Life Assurance Co. of Canada1,              a result, the only issue at trial was Ms. Fidler’s
the Supreme Court of Canada (SCC) broke new                  claim for damages for mental suffering and
ground by deciding that damages for mental                   punitive damages.
distress may be awarded for breach of contract
in certain circumstances. This case has                      The Court Decisions
important ramifications for employment-
related disputes.                                            The trial judge awarded Ms. Fidler $20,000 in
                                                             damages for mental distress. This was upheld on
What Happened                                                appeal by the Court of Appeal and by the SCC.

The plaintiff, Ms. Fidler, worked as a bank                  In breach of contract cases, the general rule
receptionist and became ill with chronic                     is that damages are awarded to restore the
fatigue syndrome and fibromyalgia at age 36.                 wronged party to the position he/she would
She began receiving long-term disability                     have been in had the contract not been broken.
benefits under her employee group insurance
plan in January, 1991.                                       Prior to Fidler, this general rule was
                                                             interpreted as meaning that damages for
In May, 1997, the insurer informed Ms. Fidler                mental distress were not generally recoverable
that her benefits would be terminated. The                   in breach of contract cases.
insurer had engaged in video surveillance of
Ms. Fidler. She was filmed doing activities                  In Fidler, the SCC transformed the law by
which the insurer considered were inconsistent               concluding that this general rule could
with her claim that she was incapable of light               include damages for mental distress,
or sedentary work. Despite medical evidence                  where such damages were in the reasonable
of incapacity exchanged between the parties                  contemplation of the parties at the time the
during the year, the insurer confirmed its                   contract was made.
decision to terminate Ms. Fidler’s benefits
                                                             In deciding whether to award damages
in December, 1998.
                                                             for mental distress to Ms. Fidler, the SCC
                                                             considered two questions:
    [2006] 2 S.C.R. 3.

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    Co-Counsel: Labour & Employment Quarterly — March 2007
1. Was an object of the disability insurance              For example, when an employee is dismissed,
   contract to secure a psychological benefit             he or she may sue his or her former employer
   that brought the prospect of mental                    for wrongful dismissal alleging that the
   distress upon the contract being breached              employer breached the employment contract
   within the reasonable contemplation of the             by failing to provide reasonable notice of
   parties at the time the contract was made?             termination. Prior to Fidler, the employee
                                                          would have been unable to claim damages for
The SCC found that the disability insurance               mental distress (unless he or she could prove
contract provided for tangible benefits, such as          an independent actionable wrong, such as
payments, and intangible benefits, such as                defamation or discrimination). Now, employers
knowledge of income security in the event of              may expect to see mental distress damages
disability. Unfairly denying benefits may make            claimed in such cases. Employees may claim
it impossible to meet ordinary living expenses,           that one of the objects of the contract was
which is likely to heighten an insured’s anxiety          to secure a psychological benefit for the
and stress. Therefore, mental distress is an              employee, involving job security; and that a
effect which parties to a disability insurance            breach of that contract therefore gives rise
contract may reasonably contemplate as                    to a claim for damages for mental distress.
flowing from a failure to pay the required                Unions may make similar claims in dismissal
benefits.                                                 arbitrations under union agreements. It
                                                          remains to be seen whether such claims will
2. Was Ms. Fidler’s mental distress of a degree           be successful, but employers should be
   sufficient to warrant compensation?                    prepared for them.

Based on extensive medical evidence                       What can employers do?
documenting the stress Ms. Fidler experienced
as a result of the loss of the disability                 •   As always, employers should strive to
coverage, the SCC concluded that it was                       treat employees fairly and reasonably.
sufficient to warrant compensation.
                                                          •   Use employment contracts that spell
What does this mean for employers?                            out exhaustively how the contract can
                                                              be terminated and make sure those
Fidler opens the door to claims for mental                    provisions are followed.
distress damages in cases involving a breach of
the employment contract or a benefit plan, or             Contact Rosalie Cress in Vancouver at
perhaps, in cases involving a breach of the     
collective agreement.

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 Co-Counsel: Labour & Employment Quarterly — March 2007
Ontario Report
                                                          3. Revising the Tribunal’s procedures.
Province Moves to Modernize its
Human Rights Legislation
                                                          “Direct Access” to the Tribunal
By Brian Smeenk
                                                          Many Ontario employers are familiar with
On December 4, 2006, the Ontario Government               the current process. The Commission plays
passed Bill 107, An Act to Amend the Human                an integral role, receiving, processing,
Rights Code (“Bill 107”). Bill 107 has received           investigating, and in many cases resolving
mixed reactions. On one side of the debate,               human rights complaints. Only a very small
critics argue that the amendments will reduce             percentage of complaints ever proceed through
access to justice for complainants who cannot             the system as far as a formal hearing in front of
afford to pursue their complaints with counsel.           the Tribunal.
On the other side, the Bill’s supporters claim
                                                          Bill 107 changes the way in which complaints
that it will lead to a more efficient human
                                                          are filed. A person who wishes to complain will
rights system, where complainants have
                                                          apply directly to the Tribunal. It will have the
“direct access” to the Human Rights Tribunal.
                                                          authority to hold a hearing or to dispose of the
The current human rights system in Ontario                application through an alternative dispute
was established in 1962, when the Ontario                 mechanism.
Human Rights Commission and the Ontario
                                                          The final version of Bill 107 establishes a
Human Rights Tribunal were created to enforce
                                                          Human Rights Legal Support Centre (the
the Ontario Human Rights Code. Currently,
                                                          “Centre”), which is independent from, but
the Commission receives and investigates
                                                          accountable to, the Government of Ontario.
complaints, and decides whether a matter
                                                          The purpose of the Centre is to provide
should go forward to a hearing before the
                                                          support services, including legal services,
Tribunal. In many instances, the process can
                                                          with respect to applications under the Code.
take several years from start to finish.
                                                          The Centre’s services will include advice and
The amendments to the Code under Bill 107                 assistance, legal and otherwise, respecting
fall into three main areas:                               the infringement of rights under Part 1 of
                                                          the Code. These services will be provided
1. Allowing complaints to be made directly to             throughout the province.
   the Tribunal;
                                                          The Commission’s New Role
2. Revising the administration and function
   of the Commission; and                                 While individuals will no longer file complaints
                                                          with the Commission, Bill 107 does not exclude

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 Co-Counsel: Labour & Employment Quarterly — March 2007
the Commission from the complaints process.                  make rules providing that it is not required
The Commission will maintain the ability to                  to hold a hearing, and limiting the extent
bring a complaint on its own behalf or to                    to which the Tribunal is required to give
intervene in individual complaints where                     the parties a full opportunity to present
the Commission believes there are systemic                   their evidence and make their submissions.
issues affecting the public interest. It can                 The Tribunal will be able to order monetary
also intervene with the consent of an                        compensation (with no upper limit),
individual applicant.                                        restitution, and any other direction that the
                                                             party ought to do to promote compliance with
The Commission’s focus, however, will shift                  the Code. The Tribunal can make remedial
to what the Ontario government is calling                    orders that are not requested by the
“proactive measures” to address systemic                     complainant.
discrimination – public education, promotion
and public advocacy, research and analysis.                  On the other hand, the Tribunal’s authority
The Commission’s specific tasks will include:                to dismiss a complaint is restricted by Bill 107.
                                                             Currently, the Tribunal is able to dismiss
•      Examining, reviewing and making                       complaints for a variety of reasons, including
       recommendations on any new statute or                 a finding that the complaint is frivolous or
       regulation, and any program or policy that            made in bad faith. Under Bill 107, where a
       the Commission feels is inconsistent with             proceeding makes its way to the Tribunal, the
       the intent of human rights legislation;               Tribunal will have to hear oral submissions
                                                             before it can finally dispose of a complaint,
•      Reviewing discrimination problems                     and may be required to issue written reasons.
       that may arise and encouraging and
       co-ordinating plans, programs and activities          Complainants will not be able to make
       to reduce or prevent such problems; and               applications to the Tribunal where they have
                                                             already started a civil proceeding in which
•      Promoting, assisting and encouraging                  they seek a remedy with respect to an alleged
       groups or persons to engage in programs               violation of the Code and that proceeding
       to alleviate tensions and conflicts based             is ongoing, or where a court has already
       upon identification by a prohibited ground            reached a decision on the issue.
       of discrimination.
                                                             Other Amendments
Revising the Tribunal’s Procedures
                                                             Bill 107 establishes a new Anti-Racism
Bill 107 gives the Tribunal the authority to                 Secretariat and a new Disability Rights
make rules with respect to practice and                      Secretariat. Both Secretariats will be aimed
procedure. Without limiting that authority,                  at undertaking, directing and encouraging
Bill 107 specifically allows the Tribunal to                 research into discriminatory practices on the

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    Co-Counsel: Labour & Employment Quarterly — March 2007
basis of racism and disability. They will also            Contact Brian Smeenk in Toronto at
facilitate the development and provision of     
public information and education programs
intended to promote the elimination of
discriminatory practices in those areas.
                                                          Random Drug Testing:
In addition, Bill 107 extends the time limit for          Dignity and Privacy of Workers vs.
filing complaints from six months to one year.            Increased Safety Goals?
Although the current six-month limitation
                                                          By Peter Brady
period is not strictly enforced, the revised
limitation period will mean that employers                What if your company operates within a highly
need to be more diligent about retaining
                                                          safety sensitive industry? It places a high
records beyond a six-month period.                        priority on worker safety and has conducted
                                                          training, documented standard safe operating
What the Changes Mean to You
                                                          procedures and gone beyond what is required
Employers should anticipate that the proposed             by health and safety legislation. As an additional
                                                          safety measure you want to ensure that drug use
changes may result in a substantial increase in
the number of complaints filed by employees               and abuse by workers does not cause accidents,
and prospective employees. Those complaints               injuries or near misses. Can you implement a
                                                          random drug testing policy? In a December 13,
which are not settled will lead to, at a
minimum, oral submissions before the Tribunal.            2006 award, arbitration board chair Michel
That means that employers will face at least              Picher all but slammed the door on such policies
                                                          in the unionized environment – even for highly
some litigation before even a frivolous
complaint can be dismissed.                               safety-sensitive workplaces (Communications,
                                                          Energy & Paperworkers Union of Canada,
In addition, with the removal of the cap on               Local 900 v. Imperial Oil Ltd.).
damages for mental anguish and the introduction
of punitive fines of up to $25,000, the cost of           Following the well-known Ontario Court of
settlements and awards may both increase.                 Appeal decision in 2001 that held that random
                                                          drug testing offends the Ontario Human Rights
Finally, human rights issues will now likely              Code (Entrop v. Imperial Oil), Imperial Oil
often become part of employment litigation                suspended its random drug testing policy.
cases, with no cap on the potential damages.              The essence of the courts decision in 2001 was
                                                          that random drug testing was impermissible
Employers are advised to be well prepared to              in part because technology did not exist to
defend their policies and practices in general,           accurately assess the effect of drug use on job
and their treatment of individual employees               performance and the tests at the time could
in particular.                                            not measure actual impairment at the time of

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 Co-Counsel: Labour & Employment Quarterly — March 2007
testing. Imperial Oil continued to be concerned           When Will Testing Be Allowed?
that workplace safety could be compromised
by worker drug use, so in July 2003 they                  The award does not create a complete ban on
reintroduced random drug testing for safety               drug testing. Picher reaffirms the conditions
sensitive positions. They felt confident doing            that must exist for an employer to require drug
this based on new technology (saliva swab test)           testing, as follows:
that could determine actual impairment
based on measuring marijuana levels in saliva.            •   Random drug testing can be performed on a
The union launched a policy grievance.                        specific employee as part of an acceptable
                                                              rehabilitation/return to work program;
In allowing the union’s grievance, Mr. Picher
made a clear and overriding statement that                •   Individual drug testing may be required
captures the essence of the award:                            where the minimum threshold of
                                                              “reasonable grounds” exist; and
    “…subjecting all employees to random drug
    testing by means of a buccal swab test                •   Testing may be required following a
    simply cannot be reconciled with the well                 workplace accident as part of investigating
    established, predominant Canadian arbitral                the cause of the accident.
    jurisprudence which holds that, in a safety
                                                          This Imperial Oil arbitration decision elevates
    sensitive working environment, drug and
                                                          employee privacy rights. Issues surrounding
    alcohol testing can be required of an
                                                          employee privacy (i.e. medical records,
    individual employee by his or her employer
                                                          personal information) have been increasingly
    only where there is a reasonable and
                                                          advanced by employees and unions in creative
    probable cause to do so, or where there
                                                          litigation. A growing body of legal decisions,
    has been an accident or incident which
                                                          arbitration awards and informed commentary
    would justify such a measure.”
                                                          suggest that privacy issues will continue to pose
Picher went on to state that such random                  challenges for employers. While historically,
testing amounts to “an unjustified affront                breaches of privacy have not attracted
to the dignity and privacy of employees.”                 significant damage awards and remedies for
This is the case even in the face of the                  such breaches continue to be limited, the move
employer’s good faith motivation of deterring             is certainly afoot to change the legal landscape
drug use and ensuring a safe workplace.                   to allow for more punitive enforcement
                                                          remedies for such breaches.
Additionally, Picher linked the strong position
against such testing to a violation of an article         Contact Peter Brady in Toronto at
in the collective agreement that required the   
employer “to treat employees with respect
and dignity.”

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 Co-Counsel: Labour & Employment Quarterly — March 2007
Western Report
                                                                The employee was paid a salary and
When Will You be Responsible for
“Wallace Damages?”                                              commissions. The commission plan stated that
                                                                only those actually working for the company on
By Rosalie Cress                                                the last working day of the month would be
                                                                eligible for commissions for that month. The
In 1997, the Supreme Court of Canada (“SCC”)                    employee was dismissed without cause three
decided that employers are to be held to an                     days before the end of March and was paid six
obligation of “good faith and fair dealing” in                  weeks’ pay in lieu of notice. The employer
the manner in which they dismiss an employee2.                  maintained that the employee was not entitled
Breach of this obligation can result in an                      to commissions for March because he was
increase in the notice period that a wrongfully                 terminated before the end of the month.
dismissed employee would otherwise be                           About a month after the employee’s dismissal,
entitled to at common law, otherwise known                      however, after the employee had pursued the
as “Wallace damages.” However, the SCC did                      matter with the employer’s head office in the
not specify how much should be added to the                     U.S., the company agreed to pay him the
common law notice period for a breach of                        commissions for March.
the duty and under what circumstances.
                                                                In determining the reasonable notice period,
Ever since this decision, the lower courts have                 the court found that in most ways, the
been trying to sort out these issues, sometimes                 employer’s conduct in the dismissal was
with conflicting results. Two recent B.C.                       appropriate and reasonably sensitive. However,
decisions reflect this inconsistency.                           the court found that the employer’s initial
                                                                refusal to pay the employee his commissions
In Hill v. Johnson Controls L.P. 3, the employer                for the month of March constituted bad
was found liable for Wallace damages after it                   faith conduct because it “needlessly and
refused to pay commissions to a terminated                      unreasonably added to the stress and anguish
employee for a period of time. The employee                     that inevitably accompanies any dismissal.” As
was a 50-year-old professional engineer who                     a result, the employee was entitled to a small
was hired by the employer to sell contracts for                 increase in the notice period for the company’s
the installation of electrical and mechanical                   bad faith conduct. The court awarded a notice
systems in commercial buildings. He was                         period of 12 months, including Wallace
employed from July 2001 until March 2005.                       damages. The portion attributable to Wallace
                                                                damages was not specified.

                                                                By contrast, in Stant v. Elaho Logging Ltd., 2006
    Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701   BCSC 718 (“Stant”), the employer dismissed the
    2006 BCSC 826                                               employee in a harsh and critical manner and

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    Co-Counsel: Labour & Employment Quarterly — March 2007
made allegations of theft. The employer also did
not pay the employee pay in lieu of notice or
                                                             Québec Report
his bonus until shortly before trial. In Stant,              Can You Go Out of Business?
however, the court did not award Wallace
damages because, after receiving legal advice,               By Pierre-Étienne Morand
the employer attempted to make amends
one month after termination by offering the                  In the context of collective labour relations,
employee the opportunity to return to his                    the employer’s right to shut down its business
previous employment. The court held that the                 can be a delicate and tricky issue, subject to
employer’s conduct did not amount to bad                     labour laws, collective agreements and other
faith in all of the circumstances because of                 related obligations.
this positive action. It did not justify extending
the notice period for Wallace damages.                       Previous Case Law

It is difficult to reconcile these two cases. In both        The Supreme Court of Canada 2004 judgment
cases, the employer attempted to rectify their               in I.A.T.S.E. Stage Local 56 v. Société de la
“bad faith” conduct approximately one month                  Place des Arts de Montréal4 confirmed the
after termination. In Stant, the employer’s                  employer’s fundamental right to go out
conduct was arguably much more serious than                  of business, either completely or partially.
in Hill and yet no Wallace damages were                      In this case, the trade union went on strike.
awarded, whereas in Hill they were. These cases              The employer, Place des arts, then resolved
illustrate how difficult it is to predict in what            to stop providing stage technician services to
circumstances Wallace damages will be awarded.               its tenants, such as the Montreal Symphonic
                                                             Orchestra and the Opera. The Supreme Court
What can employers do?                                       stated that there is no Québec legislation
                                                             obliging employers to remain in business,
•      When terminating employees, treat them                noting that the courts should not question or
       fairly and reasonably.                                evaluate the reasons underlying such a
                                                             decision. Nonetheless, the court insisted that
•      If a mistake has been made, employers                 the shut down must be genuine. For instance, a
       should take positive action to correct the            business that is not being closed permanently –
       error as soon as possible.                            but is only being closed in order to avoid
                                                             dealing with a trade union – would not meet
•      Assisting a departing employee in some
                                                             the test of genuineness and would therefore
       way, such as relocation counselling, may              be illegal.
       help to avoid Wallace damages.

Contact Rosalie Cress in Vancouver at                                           4
                                                                 [2004] 1 S.C.R. 43.

    Page 8

    Co-Counsel: Labour & Employment Quarterly — March 2007
Recent Wal-Mart Cases                                        emptied, Wal-Mart remained the lessee of
                                                             the premises, and did not seek to sublease
This important principle was recently applied                nor cancel the lease, which expires in 2012.
in cases involving Wal-Mart. In 2004, Wal-Mart               Wal-Mart then asked the Superior Court of
employees in Jonquière obtained their first                  Québec to quash the Labour Board decision6.
union certification. After the Minister of                   Wal-Mart was unsuccessful but the Québec
Labour’s decision to appoint an arbitrator                   Court of Appeal granted Wal-Mart leave
to facilitate the conclusion of a collective                 to appeal the Superior Court’s decision.
agreement, the employer decided to close up                  A judgment is expected later in 2007.
its Jonquière store and then laid off all its
employees. Many of them alleged having been                  Contractual Limitations on your Right to
laid off because of exercising their right to join           Close Your Business
a union and filed a complaint with the Labour
Relations Board.                                             A recent arbitration award illustrates that your
                                                             contractual commitments as an employer
While challenging the employer’s decision to                 towards your work force could result ultimately
shut down its Jonquière store, the trade union               in a prohibition to go out of business. In the
asked for an order that Wal-Mart be required                 Olymel7 case, the trade union contested the
to reopen its store and rehire its work force.               employer’s decision to shut down its plant
Because of the fundamental right of the                      in St-Simon, Québec. Arbitrator Jean-Pierre
employer to shut down its business, the Labour               Tremblay ordered the employer to maintain
Relations Board declined to issue such an order.             production and to continue to carry on
It found that the closing appeared genuine and               business at its St-Simon plant.
did not appear to be a mere subterfuge5.
                                                             Arbitrator Tremblay’s decision and order rested
In a more recent case, Wal-Mart challenged a                 on a letter of understanding in which Olymel
Labour Relations Board’s decision which found                agreed to maintain its economic activities at
that Wal-Mart acted improperly in dismissing                 certain plants including the St-Simon plant
employees for exercising their rights of                     unless it is necessary to transfer the production
association and unionization in connection                   to another plant. This arbitration award
with the closing of the same store in Jonquière.             illustrates that the fundamental right of
Contrary to the earlier decision, the Board                  an employer to go out of business may be
found that the shut down did not seem
definitive and authentic. The Labour Relations               6
                                                               Compagnie Wal-Mart du Canada v. Québec (Commission
Board noted that although the store itself was               des relations du travail), EYB 2006-107675 (C.S.).

                                                               Syndicat des travailleurs d’Olympia (CSN) and Olymel,
 Boutin and Wal-Mart Canada, D.T.E. 2005T-495 (C.R.T.),      société en commandite, D.T.E. 2006T-850 (Mtre. Jean-
motion for review dismissed, D.T.E. 2005T-702.               Pierre Tremblay, arbitrator).

    Page 9

    Co-Counsel: Labour & Employment Quarterly — March 2007
subject to obligations created pursuant to the
collective agreement and documents attached
                                                          Immigration Corner
thereto. While Arbitrator Tremblay recognized             Work Opportunities for
that the employer demonstrated the economic               Foreign Students
benefit of transferring the St-Simon plant
activities to another plant, he found that                By Naseem Malik
the employer did not prove the “necessity”
to do so. He ruled that “necessity” should                You are the Human Resources Director
be construed restrictively.                               for a Canadian-based company and your
                                                          responsibilities include the co-ordination
What This Means For Québec Employers                      of the hiring of employees within Canada.
                                                          Lately, some of the best candidates you are
As an employer in Québec, you are generally               interviewing for various positions are foreign
entitled to go out of business at any time,               students. Did you know that there are
either totally or in part, and for any reason.            circumstances where foreign students are
However, you should keep in mind that such a              allowed to work while in Canada? Becoming
shut down must be authentic and not a mere                more familiar with the rules that govern the
subterfuge to avoid a union. Moreover, any                lawful employment of foreign students in
agreement to which you are a party relating               Canada will be helpful in understanding the
to business closure should be carefully                   circumstances in which you can employ them.
scrutinized before signing since these
commitments could result in a restriction                 On-Campus Work
of your right to close your business.
                                                          A foreign student may work on campus at the
Contact Pierre-Étienne Morand in Québec at                institution where the student studies, without                                      a work permit, if the person is engaged in
                                                          full-time studies. Such studies must be at
                                                          either a public post-secondary institution,
                                                          or certain, defined private post-secondary
                                                          institutions. The foreign student must also
                                                          have a valid study permit.

                                                          Off-Campus Work

                                                          The Off-Campus Work Permit Program allows
                                                          foreign students at certain prescribed publicly-
                                                          funded post-secondary educational institutions
                                                          to work off-campus while completing their
                                                          studies. To qualify, the public post-secondary

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 Co-Counsel: Labour & Employment Quarterly — March 2007
institutions must have signed an off-campus               The student must also have studied full-time
work agreement with their provincial or                   for at least eight months preceding the
territorial government. Private post-secondary            completion of the program of study, completed
institutions that operate under the same rules            and passed the program of study and received
and regulations as public institutions may also           a notification of eligibility to obtain his or her
be eligible.                                              degree, diploma or certificate. The individual
                                                          must apply for a work permit within 90 days
To work off-campus, a foreign student has                 of receiving written confirmation from the
to apply for a work permit. The work permit               educational institution indicating that the
authorizes the person to work up to 20 hours              requirements have been met for completing
per week during regular academic sessions,                the academic program. The graduate must also
and full-time during scheduled breaks. To be              have a job offer from an employer for a job
eligible for an off-campus work permit, the               that is related to the field of studies and must
foreign student must have a valid study permit,           have a valid study permit when he/she applies
been a full-time student for at least six of the          for the work permit. The work permit cannot
12 months preceding his/her application for a             be for a period longer than the length of time
work permit, and be in satisfactory academic              the student studied in Canada.
standing at a participating institution.
                                                          To qualify for a work period of up to two years
The Post-Graduation Work Program                          after graduation, the foreign student must
                                                          meet all of the requirements above. The
Since 2005, this program has allowed certain              person must also have successfully completed
foreign students to work for up to two years              a program of at least two years of full-time
after their graduation. Previously, the                   studies, received written confirmation
maximum was one year.                                     (transcript, letter, etc.) from the educational
                                                          institution indicating that he/she has met the
To qualify for a work period of up to one year,
                                                          requirements of completing the program of
the foreign graduating student must have
                                                          study, studied at and graduated from an
graduated from a public post-secondary
                                                          institution located outside of the Communauté
institution, a private post-secondary institution
                                                          métropolitaine de Montréal (CMM), the
that operates under the same rules and
                                                          Greater Toronto Area (GTA) or the Greater
regulations as a public institution and receives
                                                          Vancouver Regional District (GVRD), and found
at least 50 percent of its financing for its
                                                          employment outside of the CMM, GTA or GVRD.
overall operations from government grants
(currently, only private college-level                    Contact Naseem Malik in Toronto at
educational institutions in Québec qualify),    
or a Canadian private institution authorized
by provincial statute to confer degrees.

 Page 11

 Co-Counsel: Labour & Employment Quarterly — March 2007
Quarterly Tip
Statutory Termination Payments and                           •   When does the termination and severance pay
ROEs: Getting the Timing Right                                   have to be paid to the employee? In British
                                                                 Columbia, for example, an employer must pay
By Karen Bock                                                    all termination pay owing within 48 hours of
                                                                 the termination. In Ontario, however,
It is becoming increasingly common for employees
                                                                 termination and severance pay must normally
to use severance package offers as a starting point
                                                                 be paid within seven days of termination or on
for negotiation. In the meantime, it is easy for the
                                                                 the employer’s next regularly scheduled pay
employer to lose sight of obligations under the
                                                                 day, which ever is later. The rules for
applicable employment standards legislation. In
                                                                 severance pay may be different.
the course of such negotiations, employers may
also neglect to issue a Record of Employment (an             Records of Employment
“ROE”) under Canada’s Employment Insurance
Act. Such oversights have been used by employees             •   On what date must the ROE be issued for
to allege in wrongful dismissal actions that the                 the employee? The Employment Insurance
employer acted in bad faith. That can result in                  Act provides that an ROE must be issued no
substantially increased damages awards.                          later than five days after “an interruption
                                                                 of earnings.”
Developing a checklist can help ensure
that you meet your statutory obligations                     •   Even if the employer is still negotiating
when terminating an employee. We suggest                         with the employee, the employer should
employers consider the following points:                         issue the ROE within the statutory deadline.
                                                                 If the parties reach a settlement later, the
Statutory Payments                                               employer must file a new, corrected ROE.

•      Is the employee entitled to statutory                 When plans are being made to terminate an
       notice or termination pay in lieu of notice?          employee, the employer should diarize and
       Consult the applicable employment                     keep track of the dates by which statutory
       standards legislation to determine what               payments must be made and the ROE must
       termination pay is payable to the employee            be issued. Such advance planning should help
       as of the date of termination.                        make the termination process less stressful for
                                                             employer and employee alike, and can help
•      Is the employee also entitled to statutory
                                                             to avoid allegations of bad faith conduct on
       severance pay? If so, check whether the
                                                             the part of your organization.
       length of service for purposes of calculating
       severance pay is the same as that used for            Contact Karen Bock in Toronto at
       notice of termination or termination pay.   

    Page 12

    Co-Counsel: Labour & Employment Quarterly — March 2007
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Montréal, QC H3B 0A2
Tel: 514-397-4100 Fax: 514-875-6246

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Tel: +44 (0)20 7489 5700 Fax: +44 (0)20 7489 5777

Every effort has been made to ensure the accuracy of this publication, but the comments are necessarily of a general nature, are for information purposes only and do
not constitute legal advice in any matter whatsoever. Clients are urged to seek specific advice on matters of concern and not rely solely on the text of this publication.