When privacy impacts employment

 The decision in question, dated 26 September 2012, concerned an employee who had been dismissed consequent to having being sentenced to prison for having raped the daughter of one of his colleagues. The employee challenged his dismissal on the grounds that he was dismissed for private behaviour (i.e., outside of the scope of his employment).

French case law generally prevents dismissals based on facts occurring in the employees’ private life.  Such behaviour may not constitute grounds for dismissal based on alleged misconduct unless they have a link to the professional activities of the employee, or where they constitute an infringement by the employees of the obligations arising under his employment contract. However, behaviours occurring outside of work premises may constitute a fair reason for dismissal if they result in a clear disruption within the company.

More particularly, imposition of criminal sentences and imprisonment do not constitute a fair reason for dismissal under French law (but only grounds for suspending the contract during the term of imprisonment), unless they are related to the duties of the employee, or if they have an impact on the company.

The employer had dismissed the employee 2 months after the he was convicted of rape committed on a colleague’s daughter (aged 15 at the time of the facts) and sentenced to 8 years in prison. The employer argued that the personnel of the company was shocked by the crime and that the situation created a difficult work atmosphere, which had a negative impact on the running of the company. 

The Supreme Court confirmed the dismissal, in particular on the basis of the following arguments: (i) the employer had to intervene with the employees several times to prevent rumour mongering, (ii) the employees meeting the victim’s mother (herself being employed by the company) had expressed a strong emotion, and (iii) a psychological unit had to be set up within the company.

This decision is in line with French case law and provides another example where employees can be dismissed on the basis of facts pertaining to their private lives.

Employee Privacy in the Workplace?

On October 19, the Supreme Court of Canada released its reasons in R v Cole, a widely anticipated decision on the expectation and right to privacy in the workplace. Ultimately, the Court held that employees who use computers provided by their employer may have some reasonable expectation of privacy with respect to the devices in situations where personal use is permitted by the employer. This expectation, however, is not absolute, and the Court emphasized the totality of circumstances in assessing whether such an expectation reasonably exists in a given situation. Moreover, the Court stated that the expectation of privacy could be diminished depending on the employer’s computer policies and practices.

Some background on the decision: Richard Cole, a high school teacher, was charged with possession of child pornography, which was discovered on his school-issued laptop by a technician who was performing routine maintenance on the device. Among the images found hidden on his computer were nude photographs of a student that Cole had accessed through his role as monitor of students’ use of networked laptops. The school board’s Policy and Procedures Manual, which governed Cole’s use of the laptop, provided that teachers’ email correspondence would remain private but, in some specific cases, could be accessed by the administration. Nowhere in the Manual was there a definitive statement to the effect that such school-issued laptops would be subject to general or random monitoring and/or searching. In fact, the Manual failed to address computer privacy in any context other than email. It did, however, contain the following statement: “all data and messages generated on or handled by board equipment are considered to be the property of the [school board]”. Following the technician’s discovery of child pornography on the laptop, the police searched the device with the permission of the employer, who was technically the owner of the device.

At issue was whether the laptop evidence was admissible, or whether the police’s warrantless search of the laptop was unjustified. Whether an individual has a reasonable expectation of privacy has been consistently held to depend on the “totality of the circumstances” test. To that end, the Supreme Court considered Cole’s use of the laptop to browse the web as a factor strongly indicative of his reasonable expectation of privacy. Conversely, while ownership is not determinative, the fact that the computer was work-issued was found to diminish the reasonableness of this expectation. Also comprised within the “totality of circumstances” test is the context in which personal information is placed on an employer-owned computer. Context includes the “operational realities” of the workplace, as evidenced through its policies and practices on computer usage. In this case, the Supreme Court found that the workplace policies and practices both added to and subtracted from Cole’s reasonable expectation of privacy. On one hand, written policy and actual practice permitted Cole to use his work-issued laptop for personal purposes. On the other, both policy and technological reality deprived him of exclusive control over the personal information he chose to access and save on it.

Ultimately, in a 6-1 decision, the Court found that the “totality of circumstances” in this case pulls in competing directions, but that, on balance, they support the objective reasonableness of Cole’s subjective expectation of privacy. However, by placing such a strong emphasis on workplace policies and practices as a key element of the test, the Court seems to have opened the door for employers to implement computer policies that objectively diminish employees’ expectations of privacy on their work-issued devices. What remains unclear following this decision is what such a policy would have to contain in order to surpass this threshold, always keeping in mind that policy and practice are simply two factors to consider in the “totality of circumstances” test.  

In collaboration with Michelle Felsky, student at Norton Rose Canada LLP

Generous injuries: Record-breaking punitive damages awareded

Two Canadian juries recently levied the largest punitive damages awards in Canadian employment law history, providing a blunt reminder to employers about the potential consequences of treating employees unfairly.

According to media reports, the jury in Higginson v. Babine Forest Products Ltd. awarded $809,000 to a 34-year sawmill employee - $573,000 of which was for punitive damages – for being the victim of his employer’s determined efforts to dismiss him without cause. Even higher was an October 2012 Ontario jury’s award of $1.46 million to Meredith Boucher in her case against Walmart.

In the first case, the employee, Larry Higginson, argued he was fired by Hampton Lumber Mills Inc. in a scheme meant to avoid paying him severance. Higginson argued that the Company purposely tried to get rid of him for no reason other than to avoid the payment, saying the Company first tried to make his job so awful that he would quit. The Company then created false allegations of misconduct as a justification for dismissal without notice. The jury found in Higginson’s favour and granted an award that, when combined with interest, would likely be close to $1 million in total.

In the Walmart case, Ms. Boucher was a ten-year employee who claimed she was constructively dismissed, sexually harassed, discriminated against, and a victim of intentional infliction of mental suffering by the store manager. Ms. Boucher alleged that, over a period of six months, her manager swore at her and berated her in front of other employees, while treating male employees more favourably.  She also alleged that she was punched in the arm by another manager, who was subsequently fired. Utimately, the jury rejected the sexual harassment and discrimination claims, but ordered that Walmart pay more than $1.2 million in punitive damages and damages for the intentional infliction of mental suffering and for the assault, in addition to $250,000 in damages against the manager personally. 

These landmark punitive damages awards are a caution to employers to ensure that employees are treated fairly and with respect, both during the term of their employment and upon their dismissal.

However, it should be noted that these jury awards are significantly higher than the norm. For example, in Altman v. Steve’s Music Store, a case where the judge found the employer to have unjustly dismissed an employee who was undergoing cancer treatment, the trial judge awarded $20,000 in punitive damages as part of a total award of around $200,000. In Vernon v. British Columbia, where a judge found an employee to have been terminated on false pretenses, the punitive damages totalled $50,000 on top of aggravated damages of $35,000.

Moreover, past record-breaking punitive damages awards in employment cases have been reduced or overturned on appeal. In Piersferreira v. Ayotte, the trial judge’s initial award of $500,955 and costs of $225,000 were overturned by the Ontario Court of Appeal in favour of a $60,000 award. In Keays v. Honda Canada Inc., the trial judge’s initial award of $500,000 in punitive damages was eventually erased by the Supreme Court of Canada. In Mr. Higginson’s case, the parties reached a settlement prior to appealing. It remains to be seen whether Walmart will appeal its award or similarly settle.

 Nonetheless, employers may be wise to see these awards as an opportunity to review their policies and expectations regarding acceptable workplace behaviour, and to reassess their corporate culture to make sure that employees are not being bullied or otherwise harassed. Any and all allegations of workplace violence or harassment should be investigated and dealt with in a timely and fair manner, and everyone in the workplace should be encouraged to report instances of violence or harassment without fear of reprisal.

In collaboration with Joel Kom, student at Norton Rose Canada LLP

Time-barred equal pay claims may be brought in the High Court

On 24 October 2012 the Supreme Court held in the case of Birmingham City Council v Abdulla that equal pay claims, which would have been out of time in an employment tribunal, may proceed as breach of contract claims in the High Court.

In general, equal pay claims must be brought in the employment tribunal no later than six months from the date of termination of employment. On the other hand, equal pay claims in the civil courts may be brought as breach of contract claims at any time within six years of the date of the breach, thereby giving potential claimants much longer within which to bring their claims.

Under the relevant statutory provisions governing equal pay claims, the High Court has the power to strike out equal pay claims brought in the civil courts which "could more conveniently" be disposed of by an employment tribunal.

In the Abdulla case, Birmingham City Council argued that the equal pay claims of 174 former employees brought in the High Court should be struck out using this power under what was then section 2(3) of the Equal Pay Act 1970 (now section 128(1) of the Equality Act 2010). The 174 claimants could not bring their equal pay claims in the employment tribunal because they had ceased employment with the Council more than six months before bringing the claims and their claims were therefore out of time. Before both the Court of Appeal and the Supreme Court, the Council argued that, except where a claimant could provide a reasonable explanation for failure to present her equal pay claim to the employment tribunal in time, her claim in the High Court should be struck out.

This argument failed before both Courts. The Court of Appeal considered that in exceptional circumstances the claimant's reasons might be relevant, but that was not the case here. For its part, the Supreme Court held that a claim in respect of the operation of an equality clause can never more conveniently be disposed of by the tribunal if it would be rejected by the tribunal as being out of time. The reasons for a claimant's failure to bring her claim in the employment tribunal in time were not relevant in any way to the notion of convenience.

The implication of this decision for employers is that they may be exposed to equal pay claims in the High Court long after the relevant employees have left their employ. Whilst it can reasonably be expected that straightforward equal pay claims brought in the High Court before expiry of the tribunal's time limit will be struck out as a matter of course, equal pay claims that would be time-barred if brought before an employment tribunal may nevertheless proceed in the High Court up to six years after the date of the breach of the relevant equality clause.

Bonus payments and constructive dismissal

A British Columbia company’s unilateral decision to stop paying bonuses to an employee in light of the economic downturn amounted to constructive dismissal, the British Columbia Supreme Court recently held.

In a ruling that emphasized the bilateral nature of negotiating employment terms, the Court found that the company’s decision to stop bonus payments – which made up a significant portion of the employee’s income – ran contrary to its previous practice of negotiating the payments with the employee and thus constituted constructive dismissal.

The ruling in Piron v. Dominion Masonry Ltd. 2012 BCSC 1070 (CanLII) serves as a reminder that significant conditions surrounding employment, even if not contained in a written contract, must be negotiated between both parties if they have a history of negotiation. This can even apply to something such as bonuses, which employers can mistakenly see as an incentive that they can unilaterally remove.

In Piron, the employee, a foreman at a masonry company, had been receiving bonuses since at least 2005 in connection with his work on individual projects. The bonuses made up anywhere from 10 to 50 per cent of the foreman’s gross pay and were agreed upon by the foreman and the company each time they were paid.

When the economic downturn resulted in less work, the company refused to answer the foreman’s requests to continue negotiating bonuses for subsequent projects, leading to a significant drop in his compensation. The company’s unilateral decisions to stop paying and negotiating bonuses led to the foreman’s constructive dismissal, the Court held.

While the company argued the bonus payments were discretionary, the Court found they were measured “to reflect the significance of the work being done and to satisfy the senior employees so that they were content to continue in their employment.” Moreover, the economic downturn was not a justification for unilaterally ceasing bonus payments: “Economic circumstances can lead to a substantial change to an employment contract, but the process is through negotiation, not unilateral imposition of lower compensation.”                                  

Based on the foreman’s 19 years of service with the company and the fact the foreman was less likely to find another job in the same position, the Court granted the foreman 15 months of severance pay. 

The Court’s ruling shows that even when dealing with things that may seem like perks, such as bonuses or the use of a vehicle, an employer looking to protect itself must clearly list the terms of employment in the contract and avoid making unilateral decisions if the past practice has been to negotiate terms with the employee.  Furthermore, if bonuses make up a significant portion of an employee’s income or are paid out based on certain criteria (and are therefore not discretionary), they can be seen as part of the employee’s salary and thus incapable of being unilaterally altered by the employer.

In collaboration with Joel Kom, student at Norton Rose Canada LLP