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Canadian Employment Law: 2023 Year in Review

January 29, 2024

Employment law in Canada continued to evolve in 2023. Courts and tribunals across the country dealt with issues ranging from notice periods and fixed-term contractor agreements to the tort of harassment and time theft. While there were a number of notable decisions, here are some highlights from 2023 Canadian case laws.

Small, Fraudulent Business Expenses Support Just Cause Termination

In Mechalchuk v. Galaxy Motors (1990) Ltd., the Supreme Court of British Columbia found that the plaintiff’s employment was terminated for just cause because he submitted fraudulent business expenses worth approximately C$250. Mr. Mechalchuk submitted meal expense receipts under the guise of the meals having been business related, when in fact, they were personal meals with his spouse. The court found that Mr. Mechalchuk was dishonest to his employer and breached its trust. He also failed to “come clean” when he was given an opportunity to do so. This was sufficient to support just cause for Mr. Mechalchuk’s termination. This shows that employees’ fraudulent actions may be just cause for termination, even if the monetary cost is low.

Extended Notice Periods Only in “Exceptional Circumstances”

In 2023, Ontario courts confirmed that notice periods longer than 24 months will only be awarded in exceptional circumstances. For example, in Milwid v. IBM Canada Ltd., the court awarded damages based on a 27-month notice period, emphasizing that it was due to exceptional circumstances, including that the termination occurred two months into the pandemic. Similarly, in Lynch v. Avaya Canada Corporation, the court awarded a 30-month notice period, stating a notice period longer than 24 months is only supported in exceptional circumstances.  

New Tort of Harassment in Alberta

The Alberta Court of King's Bench created a new common law tort of harassment in Alberta Health Services v. Johnston. The court stated that a defendant has committed a tort of harassment where a person has: (1) engaged in repeated communications, threats, insults, stalking or other harassing behaviour in person or through other means, (2) known or ought to have known that such action was not welcome, (3) engaged in actions impugning the dignity of the plaintiff and would cause a reasonable person to fear for their safety or the safety of their loved ones, or could foreseeably cause emotional distress, and (4) caused harm. We note that the law is still unsettled in the other provinces. For more information on this case, see this August 2023 Blakes Bulletin: Alberta’s New Tort of Harassment

Contractors Required to Mitigate Damages

In Monterosso (c.o.b. Truck Leasing Canada) v. Metro Freightliner Hamilton Inc., the Ontario Court of Appeal held that independent contractors have a duty to mitigate their damages following the breach of a fixed-term agreement. In this case, the independent contractor was engaged for a 72-month fixed term contract and the company terminated the engagement with 65 months remaining. In prior cases, fixed-term employees have been awarded payment to the end of the contract where there is no enforceable termination provision, without any requirement that the employee attempt to mitigate their losses. Here, while the court awarded the contractor payment for the remainder of the fixed term, this payment was indeed subject to the contractor’s duty to mitigate.  

Employee’s Surreptitious Workplace Recordings Constitutes Cause for Dismissal

The British Columbia Court of Appeal upheld that an employee’s surreptitious recordings of colleagues was cause for dismissal in the 2023 decision, Shalagin v. Mercer Celgar Limited Partnership. The court found that the recordings were “underhanded and would be regarded by most employers as misconduct undermining the trust relationship between employer and employee.” The court also held that the recordings “violated the privacy interests of persons who were recorded, as well as those who were discussed in the recordings.” Based on those factors and the entire context, the court upheld the decision that there was just cause for dismissal.

Employee Required to Pay Employer for “Time Theft”

In Besse v. Reach CPA Inc. the British Columbia Civil Resolution Tribunal (Tribunal) ordered Karlee Besse to pay her former employer for its losses due to Miss Besse’s time theft. The employer engaged software that recorded Miss Besse’s work activity. The Tribunal found the software likely accurately recorded Miss Besse’s work activity and detected 50.76 unaccounted hours recorded on Miss Besse’s timesheets. The Tribunal upheld the termination of Miss Besse’s employment for cause and ordered Miss Besse to pay her former employer C$2,603.07 in debt and damages for time theft.

City of Greater Sudbury Held Liable as an Employer for Pedestrian Death

In R. v. Greater Sudbury (City)the Supreme Court of Canada ruled that the City of Greater Sudbury can be held liable as an “employer” under Ontario’s Occupational Health and Safety Act  for the death of a pedestrian, despite having appointed a third party as the project’s “constructor.” This was a rare 4-4 decision. Since a majority is required to overturn a lower court’s ruling, the appeal was dismissed, and the Ontario Court of Appeal’s decision was upheld. For more information, see this November 2023 Blakes Bulletin: Widening the Lens of Liability: The Supreme Court’s Decision in R. v. Greater Sudbury (City)

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