Why Employers Cannot Deduct Tax Obligations from Wrongful Dismissal Settlements

Taxes. People hate taxes. From paying taxes to wrestling with the provisions of the Income Tax Act there really is no joy when it comes to taxation.

A 2015 decision of the Ontario Superior Court of Justice, RJM56 Investments Inc. v Kurnik, 2015 ONSC 6893 (CanLII) presented two questions with respect to the interplay between employment-law settlements and taxation:

1. Must an employer withhold tax from an amount paid to an employee’s lawyers on account of incurred legal fees? And
2. Can an employer deduct the amount it must pay on account of EI, CPP, and EHT from the amount payable as a settlement?

While the answer to both questions may, or at least should, be obvious to any lawyer who practices in this area, Justice S.A.Q. Akhtar’s decision is an important, recent imprimatur of some rather fundamental principles employed daily by Ontario employment lawyers.

Why the Human Rights Tribunal may Not be the Place to Plead your Workplace Harassment Case

The Ontario Human Rights Code is a powerful law, capable of addressing serious systemic issues related to, amongst other things, employment. But, it is not a panacea.

On December 29, 2015, I authored a blog post titled Law & Order: Special Victims Unit - How the Human Rights Code is Changing Ontario Employment Law. In that post I wrote that:

Unless the employee alleges a violation of the [Human Rights] Code, which requires the employee to demonstrate that one of his or her distinguishing features was somehow a factor in the decision to subject the employee to harassment (or some other form of negative treatment), the employee has no comparable remedy. Employees subject to ‘everyday' harassment have no real ability to have someone ‘in charge’ review their employers’ actions.

A case from the Human Rights Tribunal of Ontario, Luthra v. CAPREIT Limited Partnership, 2015 HRTO 1658 (CanLII), released on December 8, 2015, with reasons for decision authored by Vice-Chair Jo-Anne Pickel very clearly demonstrates that point.

Although the Applicant successfully proved that she was a person suffering from a disability (she had epilepsy) and had her evidence accepted that she may have been discriminated against and harassed in employment, (which only served to aggravate her medical condition,) because the Applicant had not alleged that she suffered such discrimination and harassment because of her disability, the Tribunal was legally impotent to address the situation. The Application was dismissed.

As an additional point of interest, in the Luthra case, the Applicant had alleged that her employment was inappropriately terminated because she was not guilty of the “offences” her employer alleged. As Vice-Chair Pickel noted, although the Human Rights Code does speak to protection from discrimination on the basis of a “record of offences,” that term does not mean what most people think it means and cannot be used a means by which the Human Rights Tribunal can review the appropriateness of any workplace punishment.

Luthra is thus an important read for any person considering bringing a Human Rights application against his or her employer.

Court Censures Employer After Refusing to Reinstate Employee Following Maternity Leave and Creating Childcare Chaos

What will be the court’s censure for an employer’s unwillingness to accommodate its employees’ childcare arrangements, except where legitimate, justifiable grounds exist for being unable to do so? According to the Honourable Justice Susan E. Healey of the Ontario Superior Court of Justice, no less than $20,000.

In her reasons for decision reported at Partridge v. Botony Dental Corporation, 2015 ONSC 343, affirmed on appeal 2015 ONCA 836, Justice Healey threw the proverbial book at an employer who not only falsely alleged just cause for dismissal, but also engaged in acts of reprisal and violated one of its employee’s human rights after the employee had taken maternity leave.

In another good hard look at the consequences of messing with an employee’s right to return to work following maternity leave, (see also the case of Bray v Canadian College of Massage and Hydrotherapy, 2015 CanLII 3452 (ON SCSM), a decision of the Ontario Small Claims Court, summarized by this blog in the post Ontario Small Claims Court Awards Human Rights and Punitive Damages after New Mom Constructively Dismissed,) Ontario’s judges continue to demonstrate that an employee’s right to take parental leave is pretty much sacrosanct.

Why is it Time to Fix the Discriminatory EI Regime? Because It’s 2016.

New Year’s Eve is a time of resolution making. Most people take this time to reflect on the year past and look ahead to what they wish to achieve in the year ahead. I am no different.

In 2015, I started work on a project in an attempt to have the Employment Insurance regime amended. Specifically, I believe that the provisions governing maternity/parental leave should be removed from the EI regime and made a stand-alone system. (Standard disclaimer that this is a personal opinion, which may not necessarily be shared by the firm that employs me.) In starting this process I wrote the following executive summary:

By placing the provisions of income replacement benefits for new and expectant parents within Canada’s Employment Insurance regime, the current law creates unexpected and discriminatory consequences for parents who lose their employment either during or shortly following the taking of maternity and/or parental leave. Such a regime would likely not withstand judicial scrutiny in the face of the Federal Court of Appeal’s decision in Canada (Attorney General) v. Johnstone. While the societal benefits of providing publicly funded income replacement benefits to new and expectant parents cannot be challenged, by associating the provision of such benefits with the provision of benefits for the unexpected loss of employment, the present law defeats the intended purposes of both regimes. The recommended solution to this problem is to disassociate the provision of income replacement benefits for new and expectant parents from the Employment Insurance regime, by creating a new regime exclusively for the provision of such benefits.

From there I set about drafting a paper that would address the problems with the current system. It is still a work in progress. The EI system is complicated and has evolved over time, through a series of governments of different political stripes.

Canada now has a new government. New governments, like new years, bring change with them. Whether this government will be interested in such a proposal I cannot say.

What I can say is that the current EI system is broken. Too many people lose their employment as a result of taking time off for maternity and/or parental leave. Changes to the EI regime will not change that unfortunate fact. However, by changing the EI regime insult will not be added to injury.

Thus my resolution for 2016 is this: First and foremost finish what I started, i.e. the paper. Second, find a way to have this idea placed onto the national agenda.

If you’re interested in this project and want to help, please email me at sbawden@kellysantini.com. Assistance can come in any manner of ways, from legal research, to writing, to editing, to public relations. We have all skills and talents.

Happy New Year, dear reader. Why is it time to fix this problems with the EI system? Because it’s 2016.

Law & Order: Special Victims Unit - How the Human Rights Code is Changing Ontario Employment Law

What can the American television programme Law and Order teach us about employment law in Ontario? Not a lot, really. But the opening line from the Special Victims Unit franchise does illustrate one point, which will be of increasing focus in the coming years:

In the criminal justice system, sexually-based offenses are considered especially heinous. In New York City, the dedicated detectives who investigate these vicious felonies are members of an elite squad known as the Special Victims Unit. These are their stories.

Why do I reference Law and Order SVU on an Ontario employment law blog? Because if the opening words of that show teach us anything, it is that different crimes are treated differently by the justice system. Nowhere in the Ontario employment law context is this disparate treatment more acute than with respect to the issues of workplace harassment and discrimination.

Let us compare and contrast two decisions, both from the Court of Appeal for Ontario: Piresferreira v. Ayotte, 2010 ONCA 384 (Cronk, Lang and Juriansz JJ.A.) and Partridge v. Botony Dental Corporation, 2015 ONCA 836, (Laskin, Pardu and Roberts JJ.A.)

Decision to Breastfeed a “Personal Choice”, which Need Not be Accommodated: Federal Court of Appeal

Earlier this year I wrote about a decision of the Public Service Labour Relations and Employment Board (“PSLREB”), in which Member Augustus Richardson held that an employee’s work requirements that impacted on that employee’s breastfeeding schedule did not constitute discrimination on the basis of either sex or family status. See: Employers Need Not Accommodate Employees “Choice” to Breastfeed - PSLREB.

Now the Federal Court of Appeal has judicially reviewed that decision and a panel of three judges (two women and one man) upheld it.

In its decision rendered November 10, 2015, (Flatt v. Canada (Attorney General), 2015 FCA 250 (CanLII)), the Federal Court of Appeal upheld the decision that the employee’s decision to breastfeed her child was a “personal choice”, holding specifically at paragraph 35 of its reasons for decision that, “Breastfeeding during working hours is not a legal obligation towards the child under her care. It is a personal choice.”

Some people are going to disagree.

Top Five Cases of Importance to Ontario Employment Law - 2015

Download This Post as a PDF!

I have listed my “Top Five Cases of Importance to Ontario Employment Law” every year since 2012 (see: 2012, 2013, 2014.) So, with another year coming to a close it is once again time for this Ontario employment lawyer to provide his picks for the Top Five Cases of Importance to Ontario Employment Law.