Top Five Employment Law Developments in Ontario in 2012: What Employers Need to Know for 2013

The decisions outlined below gave rise to what we believe were the most noteworthy employment law developments of 2012. We discuss how these developments will affect employers in 2013.

1.    Ontario Court of Appeal Recognizes New Privacy Tort

Early in 2012, the Ontario Court of Appeal recognized a new common law cause of action for invasion of privacy, called the tort of "intrusion upon seclusion" (Jones v. Tsige¹). The tort is limited in application: there must be an intentional and highly offensive intrusion on a person’s privacy without lawful justification. Only intrusions into matters such as "one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence" will give rise to the tort. The Court made clear that the new cause of action should not open the floodgates of privacy litigation: claims by those unusually concerned about their privacy were excluded and privacy rights were not found to be absolute, but instead to yield to other rights in appropriate circumstances. While proof of economic loss is not required to make out the tort, the Court noted that damage awards will typically be modest.

Implications for Employers. This case arose in a workplace where one employee was able to access private information about another. Although the tort is limited in its application, employers should be mindful that they could be vicariously liable for intrusion upon seclusion through the actions of their employees. Employers who collect and store personal information should ensure that policies, practices and network architecture are in place to reduce civil liability. Employers should have a clear privacy policy that limits employees’ expectations to privacy and reserves the employer’s rights to broadly monitor employees’ computer use. Employers should also offer routine training to employees to ensure that they understand their rights and obligations; employers should also consistently take disciplinary action for breaches of privacy policies. Personal information should be protected from broad access by network architecture where possible.

2.   Liability for Long-Term Disability Benefits if Dismissed Employees Are Disabled in the Common Law Notice Period

In Brito v. Canac Kitchens,² the Ontario Court of Appeal confirmed that employers are exposed to significant liability when they neither extend long-term disability (LTD) benefits during the common law notice period nor obtain a release. In this case, the employer provided the dismissed employee with only the statutory minimum notice period, discontinued LTD coverage thereafter and did not obtain a release. The Court found that since the employee was entitled to benefit coverage during the common law notice period and the employee had become permanently disabled during that period, the employer was liable for the employee’s LTD benefits until the age of 65.

Implications for Employers. This case was one of the most sobering of the year for employers. To reduce this type of liability in 2013, employers should ensure that employment contracts explicitly limit the duration of LTD benefits to the statutory notice period. In the absence of such contracts, employers should ask their insurers whether disability benefits may be extended through the common law notice period. (Typically, however, insurers will end LTD coverage on the last day of the statutory notice period.) Where possible, employers should provide reasonable notice, with an amount attributable to loss of benefits, and obtain a release of any claims, including expressly for the loss of disability benefits. (Remember that an employer cannot obtain a release in exchange for minimum statutory entitlements.) Finally, if a release cannot be obtained, employers may consider purchasing LTD insurance for the common law notice period, particularly if an employee is at high risk of becoming totally disabled during that time.

3.    No Duty to Mitigate Under Fixed-Severance Employment Agreements

In Bowes v. Goss Power Products Ltd.,³ the Ontario Court of Appeal held that an employee who is contractually entitled to a fixed notice period (or pay in lieu thereof) has no duty to mitigate damages on termination of employment unless the employment contract expressly states otherwise.

Implications for Employers. Employers who offer fixed notice periods or liquidated damages on termination should clarify the issue of mitigation in any new employment contracts in 2013. If employers intend employees to have a duty to mitigate, the contracts should specify the reduction of notice period pay on account of mitigation. If employers intend post-termination non-competition restrictions to also apply, the terms and duration of those restrictions should be considered in conjunction with the mitigation obligation.

4.    Supreme Court of Canada Confirms Workplace Privacy Rights

The Supreme Court of Canada confirmed in R. v. Cole⁴ that employees have a reasonable expectation of privacy from state interference with respect to information on their work computers, just as they do on their home computers, provided that personal use of the work computer is permitted or reasonably expected. However, the Court deferred the question of employers’ rights to monitor and access their employees’ use of technology.

Implications for Employers. While focused on the expectation of privacy vis-à-vis the state, the Court’s decision underscores for employers the importance of clear, consistently enforced workplace privacy policies. Employers wishing to monitor their employees’ use of their work computers should explicitly reserve the right to broadly monitor and search the computer, including employees’ private communications or personal information. Any prohibited uses should be specifically listed in the policy so that employees are aware of these. The Court’s decision also makes clear that even when an employer has policies in place and maintains ownership of devices used by employees, an employee may still have a reasonable expectation of privacy in personal information stored on those devices. As a result, employers wishing to ensure that their employees have no or a low expectation of privacy over information stored on work devices should consider taking other steps, including prohibiting technology for personal use, blocking access to websites used mainly for personal reasons and creating network architecture that prevents employees from saving information in non-public folders.

5.    Key Employees Obliged to Give Reasonable Notice

In GasTOPS v. Forsyth,⁵ the Ontario Court of Appeal found that four "key employees" were obliged to give reasonable notice of resignation, in the range of 10 to 12 months, before starting a competing firm. In this case, the Court found that the four employees owed a duty of good faith to their employer, even though they were neither senior executives nor involved in business planning. The Court upheld an award for nearly $20 million in damages, finding that the employees breached their duty by resigning with only two weeks’ notice before starting a competing firm and soliciting their former co-workers with an intent to damage their employer’s business.

Implications for Employers. GasTOPS confirms that good faith duties are owed by "key employees" – those who have actual influence over their employer’s business, regardless of seniority and title. The case is helpful for employers seeking to protect their legitimate business interests against unfair competition by former employees. Employers may rely on the case in insisting on reasonable notice of resignation from employees who could damage their employer’s business through unfair competition.

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¹ 2012 ONCA 32 (CanLII).

² 2012 ONCA 61 (CanLII).

³ 2012 ONCA 425 (CanLII).

⁴ 2012 SCC 53 (CanLII).

⁵ 2012 ONCA 134 (CanLII).