24 Key Developments in Canadian Labour and Employment Law in 2021

In 2021, Canada saw significant statutory and case law developments in labour and employment law, some of which related to COVID-19.  This Insight provides an overview of key 2021 developments, with links to more detailed articles and commentary.

  1. On January 1, 2021, Bill C-65, An Act to amend the Canada Labour Code and other legislation (Bill C-65) and the Work Place Harassment and Violence Regulations (Regulations) came into force.  Bill C-65 and the Regulations set out the requirements that federally regulated employers must meet in order to satisfy their obligations under the Canada Labour Code to investigate, record, report, prevent and provide training with respect to workplace harassment and violence, including sexual harassment and sexual violence.  Links to more detailed articles are available here and here.
  1. In McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816, the Court of Appeal for Ontario (OCA) upheld the lower court’s decision to award an employee one of the highest damage awards ever granted in Canada for constructive dismissal ($1,270,000), the amount the employee would have earned for the balance of the term of his contract.  In doing so, the OCA did not interfere with the trial judge’s finding that the employee, “did not return to work, could not return to work, and did not condone the [employer’s] actions.” In concluding that the employee had not condoned his constructive dismissal, the OCA considered the employee’s unique personal circumstances and noted that he did not return to work due to depression and anxiety caused by the employer’s conduct in constructively dismissing him. A link to a more detailed article is here
  1. In C.M. Callow Inc. v. Zollinger, 2020 SCC 45, the Supreme Court of Canada (SCC) expanded the duty of honest performance, which applies to parties to all contracts including employment contracts, by holding that they cannot knowingly deceive one another about matters directly linked to performance of the contract.  This prevents a party to the contract from remaining silent upon becoming aware that a counterparty has developed a false impression caused by the party’s misleading conduct. Callow has significant implications for employers in relation to their employment agreements and other contracts.  For example, once a termination decision is made but not yet carried out, an employer should not deliberately mislead the employee through “active communications” that reassure the employee that their future employment is secure.  A link to a more detailed article is here
  1. In Caplan v. Atas, 2021 ONSC 670, the Ontario Court of Justice recognized a new common law tort of internet harassment, which may provide recourse and remedies for employers (and others) who are harassed, bullied and/or stalked online. A link to a more detailed article is here.  
  1. The decision of the SCC in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 (Wastech) clarified the duty to exercise contractual discretion in good faith.  Wastech, which applies to all contracts entered into in which a party has discretionary power, including such contracts entered into by employers, provides that the duty to exercise contractual discretion in good faith is obligatory in all contracts even when the discretion is unfettered; cannot be contracted out of; operates irrespective of the intention of the parties; and requires the parties to exercise their discretion reasonably and not capriciously or arbitrarily. Determining whether a breach has occurred involves contractual interpretation and when the duty is violated the contract is breached.  A link to a more detailed article is here.
  1. The Ontario Court of Appeal’s decision in Abbasbayli v. Fiera Foods Company, 2021 ONCA 95 reminds corporate directors that: (a) an employee may be able to make a claim against them in a wrongful dismissal action for unpaid wages under s. 131 of the Ontario Business Corporations Act (OBCA), including in circumstances when such a claim is unavailable under s. 81 of the Employment Standards Act, 2000 (ESA); and (b) in certain circumstances, a non-shareholder employee may have standing as a “claimant” to claim “oppression” under OBCA s. 248 in an to attempt to hold directors personally liable.  A link to a more detailed article is here.
  1. In Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 1455, the Ontario Superior Court determined that if an employee is pregnant at the date of dismissal, her pregnancy is a factor that a court may consider when determining her reasonable notice period, provided the pregnancy is reasonably likely to negatively impact the employee’s ability to find alternative employment. The court observed that in most cases, pregnancy is likely to increase the amount of time it will take a person to find new employment because an employer seeking to fill a position is likely to have a bona fide immediate need for someone in the role and many employers would not be interested in a new employee who would soon be absent because they would require a lengthy leave.  The court awarded the 28-year-old employee five months’ reasonable notice after she worked for the employer for only four and a half months.  On November 15, 2021, in Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 7546, the Ontario Superior Court of Justice (Divisional Court) dismissed the employer’s appeal.  A link to a more detailed article is here.  
  1. Ontario Regulation 228/20 (IDEL Regulation) under the Employment Standards Act, 2000 (ESA) provides that an employee in a non-unionized workplace who, any time during the “COVID-19 period” does not perform the duties of their position because their work hours are temporarily reduced or eliminated by their employer for reasons related to COVID-19, is deemed to be on Infectious Disease Emergency Leave (Deemed IDEL). The Regulation amends layoff and constructive dismissal rules under the ESA, and in most cases, eliminates temporary layoffs and the risk of a constructive dismissal claim under the statute for the defined “COVID-19 period.” The end date of the COVID-19 period has been extended several times (most recently to July 30, 2022).  In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (Ocular Health), Ontario’s Superior Court of Justice (SCJ) decided that the IDEL Regulation did not remove an employee’s common law right to claim constructive dismissal arising from a layoff during the COVID-19 pandemic. However, just six weeks after Ocular Health was decided the SCJ came to the opposite conclusion. In Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135, the SCJ decided that the IDEL Regulation precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law.  At this time, we await the result of appeals of both decisions.  In the meantime, these contradictory decisions leave the law in an ambiguous state.  Links to more detailed articles are available here and here
  1. In United Nurses of Alberta v. Alberta Health Services, 2021 ABCA 194, the Alberta Court of Appeal confirmed that the applicable test for establishing a prima facie case of family status discrimination in Alberta is the three-part test established by the Supreme Court of Canada in Moore v. British Columbia (Education), 2012 SCC 61.  A link to a more detailed article is here.
  1. On June 3, 2021, the federal government’s Bill C-5, amending Canada Labour Code and other legislation received Royal Assent.  This bill provides for annual observance by the federal government and federally regulated workplaces of a new statutory holiday on September 30, the National Day for Truth and Reconciliation.  A link to a more detailed article is available here.
  1. In O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385, the OCA held that the common employer doctrine imposes liability on companies within a corporate group only if each can be said to have entered into a contract of employment with the employee.  A link to a more detailed article is here
  1. In Eynon v. Simplicity Air Ltd., 2021 ONCA 409, the OCA refused to overturn a jury’s $150,000 punitive damage award in favour of an employee who sued the employer for injuries suffered in a workplace accident. The trial judge’s instructions to the jury on punitive damages focused on the hour between the accident and the employee’s arrival at hospital. During this time the employee’s supervisor indicated that he had little regard for the safety of the employee, laughed when the employee screamed in pain, refused to look at the employee’s injury or call an ambulance as the employee asked, dropped the employee at a hospital entrance, told him to say the injury occurred at home, and did not accompany him inside.  In dismissing the appeal, the OCA stated the conduct of the supervisor occurred in the course of his employment, his conduct was the conduct of the employer, and it occurred within “a culture within the company whereby employees failed to place adequate importance on best safety practices.”  A link to a more detailed article is here
  1. Hawkes v. Max Aicher (North America) Limited, 2021 ONSC 4290 (Max Aicher), is an important decision of the Ontario Superior Court pertaining to section 64 of the Employment Standards Act, 2000 (ESA), which requires an employer that terminates an employment relationship with an employee to pay minimum ESA severance pay to the employee if the employee was employed by the employer for five years or more, and the employer has a payroll of $2.5 million (CAD) or more. Max Aicher establishes that to make the determination under ESA s. 64, employers must consider the size of their global payroll; if an employer’s payroll in Ontario is less than $2.5 million but its global payroll is $2.5 million or more, the employer will be liable for severance under the ESA.  A link to a more detailed article is here
  1. In Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005, the Ontario Superior Court held that a fiduciary employee could be terminated for cause immediately because they conducted themselves dishonestly and/or exercised poor judgment on significant issues, as such behaviour cumulatively amounted to a repudiation of the employment contract.  Notably, each of the employee’s actions did not justify termination for cause on its own; however, a number of such incidents at or around the same time may justify with-cause dismissal when taken as a whole.  Furthermore, Goruk indicates that in circumstances where there are multiple incidents involving the employee’s dishonesty and/or poor judgment, the employer will not be required to provide warnings or engage in progressive discipline before the employee’s job termination, even when the employee is a long-term employee whose employment record has been otherwise perfect.  A link to a more detailed article is here
  1. On August 31, 2021, Canada’s federal Pay Equity Act (Act) came into force.  The Act creates a proactive pay equity regime within the federal public and private sectors to ensure that federally regulated workplaces provide equal pay to everyone for work of equal value.  Under the Act, the employer is required to proactively analyze its compensation practices to ensure they are equitable and in compliance with the Act. A link to a more detailed article is here
  1. In Morningstar v. WSIAT, 2021 ONSC 5576 (Morningstar), the Ontario Superior Court of Justice, Divisional Court quashed the portion of the 2020 decision of the Workplace Safety and Insurance Appeals Tribunal (WSIAT) in Decision No. 1227/19, 2019 ONWSIAT 2324, which held that if an employee sustains harm due to harassment and bullying in the workplace, they can make a claim for constructive dismissal only through section 13(4) of Workplace Safety and Insurance Act (WSIA) (which entitles the claimant to benefits under the insurance plan for chronic and traumatic stress). The Divisional Court held that if an employee sustains such harm, they are not required to limit their claims to those they can make through WSIA, and they may also bring a civil claim in constructive dismissal against the employer.  A link to a more detailed article is here
  1. On October 6, 2021, the Canadian federal government announced that federal public servants in the Core Public Administration, and employees in the federally regulated air, rail and marine transportation sectors, would be subject to mandatory vaccination policies, and travellers using these modes of transportation would be required to be fully vaccinated against COVID-19. A link to a more detailed article is available here.  On December 7, 2021, the federal government announced its intention to make vaccination against COVID-19 mandatory in early 2022 in all federally regulated workplaces. 
  1.  In Hucsko v. A.O. Smith Enterprises Limited, 2021 ONCA 728, the OCA confirmed that if a properly conducted investigation concludes that an employee has engaged in sexual harassment in the workplace, the employer is entitled to take firm action, which may range in severity and, at its most forceful, include termination of employment for cause.  This finding indicates that corrective action short of dismissal can be an appropriate employer response to workplace sexual harassment. The appropriate disciplinary action is dependent on the context of each case.  A link to a more detailed article is here.
  1. In Northern Regional Health Authority v. Horrocks, 2021 SCC 42, SCC decided that labour arbitrators have exclusive jurisdiction under labour relations legislation over disputes that arise, in their essential character, from the interpretation, application, or alleged violation of the collective agreement (CA). This presumption of exclusivity will only be rebutted where a competing statutory scheme demonstrates the legislature’s express intention to displace arbitrators’ exclusive jurisdiction by carving into it (e.g., by granting exclusive or concurrent jurisdiction over disputes of a specific nature to a competing tribunal).  The SCC also decided that Manitoba’s Human Rights Code does not expressly displace the exclusive jurisdiction of the labour arbitrator under the Manitoba Labour Relations Act in such cases. As a result, the Manitoba Human Rights Commission has no jurisdiction over such claims. A link to a more detailed article is here
  1. In United Food and Commercial Workers Union, Canada Local 333 v. Paragon Protection Ltd., an arbitrator in Ontario dismissed a union’s policy grievance and upheld a mandatory COVID-19 vaccination policy on the grounds that it was reasonable and did not breach the CA.  The arbitrator considered the specific language of the CA, which may differ from the language of other CAs.  Despite the uniqueness of the language in the CA, the Paragon award, although non-binding, may provide an indication of the direction arbitrators will be taking on the topic of mandatory COVID-19 vaccination policies in unionized workplaces.  Paragon may also influence judicial decisions that will inevitably be rendered on this topic in the non-unionized context.  However, only two days after the mandatory vaccination policy was upheld in Paragon, such a policy was struck down by a different arbitrator in Electrical Safety Authority and Power Workers’ Union (Authority)The arbitrator in Authority emphasized that, in assessing the reasonableness of a mandatory vaccination policy, a contextual analysis approach is key. The Authority award opens the possibility that, based on such an analysis, some mandatory vaccination policies may be struck down.  Links to more detailed articles are here and here.
  1. In Ontario Power Generation and The Power Worker Union (OPG), an arbitrator in Ontario considered a policy that provides for a vaccinate-or-test alternative.  Although the award is not binding and other arbitration awards pertaining to such policies are expected, OPG is an influential award that provides encouragement to employers.  OPG indicates that employers that implement vaccinate-or-test policies will be required to pay for the tests; however, they will not be required to compensate employees for time spent administering the test outside working hours. Furthermore, OPG suggests that employers will be permitted to place unvaccinated employees who refuse to test on an unpaid leave of absence.  Moreover, although he was not required to decide this issue, the arbitrator took the opportunity in OPG to provide preliminary encouragement to employers when he stated that an employee’s termination of employment due to their refusal to be tested is “very likely” to be upheld at arbitration.  A link to a more detailed article is here
  1. On November 19, 2021, in Amalgamated Transit Union, Local 113 v. Toronto Transit Commission and National Organized Workers Union v. Sinai Health System, 2021 ONSC 7658 (TTC/Sinai Decision), the Ontario Superior Court dismissed union applications asking it to grant injunctions restraining the TTC and Sinai from suspending or terminating unvaccinated employees before their mandatory vaccination policies could be challenged in the grievance process.  The court reasoned that there was no gap in the legislative regime that would support the exercise of the court’s residual jurisdiction. The TTC/Sinai Decision confirms that in the unionized context, there is a clear process under the statutory scheme of Ontario’s Labour Relations Act, 1995, which allows a union to challenge a mandatory vaccination policy on an expedited basis, and that unions must challenge mandatory vaccination policies through the labour arbitration process.  A link to a more detailed article is here
  1. On November 24, 2021, British Columbia announced that beginning January 1, 2022, workers covered by the province’s Employment Standards Act (ESA), including part-time, temporary or casual workers, will be eligible to take up to five days of paid sick leave per year for any personal illness or injury, provided they have worked with their employer for at least 90 days. Employers must pay their employees their regular wages for these days, which do not have to be taken consecutively.  As well, on November 26, 2021, the federal government announced that it had introduced Bill C-3, An Act to amend the Canada Labour Code (Bill C-3) for First Reading.  If it is passed as law in its current form after it makes its way through the legislative process, Bill C-3 will amend the CLC to provide 10 days of paid sick leave per year to workers in the federally regulated private sector. A link to a more detailed article is here
  1. On December 2, 2021, Ontario’s Bill 27, Working for Workers Act, 2021 received Royal Assent and came into force on that day. Among other things, Bill 27 requires specified employers to implement a disconnecting-from-work policy, prohibits certain non-compete agreements, establishes a licensing regime for temporary help agencies and recruiters, and implements certain employment protections for foreign nationals. Links to more detailed articles are here and here.

Littler LLP looks forward to following the evolution of labour and employment law in Canada in 2022.  We will continue to report on important developments.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.