Notice of termination vs severance

One of the challenges of teaching students about interpreting collective agreements is the effect of clauses is often very hard to know because they can interact with other clauses in the collective agreement as well as other regimes of employment law. As part of a research project, I came across a 2011 decision that is a fun read about termination notice and severance pay.

The decision is:

Canadian Energy Workers Association v ATCO I-Tek Business Services Ltd, 2011 CanLII 81659 (AB GAA)

You can find the decision on canlii.org by searching the CanLII number (81659). CanLii is an excellent repository of Canadian law.

The basic facts are these:

• The employer was outsourcing a significant number of positions and this resulted in significant number of terminations.
• The collective agreement gave the affected workers rights to (1) working notice (or pay in lieu of notice) under Article 30 and (2) severance under Article 32 and a Letter of Agreement.
• The union argued that the permanent workers were entitled to benefit from both sets of rights; the employer argued that workers were only entitled to severance.
• (There was a second issue around a worker signing a release that isn’t really all that interesting.)

The union’s argument was (loosely, I’m paraphrasing in the interest of space) notice is designed to give workers a chance to find alternative employment while severance is compensation for their investment in their workplace that is lost upon termination. Essentially, these two are complementary, rather than alternative, entitlements.

The employer’s argument (again, loosely) was that the entitlements are mutually exclusive and applicable in different circumstances and this the benefits do not compound. Reading the provisions as complementary creates an excessive benefit for the workers.

I won’t spoil the ending for you. The panel’s decision flows from an interesting exploration of the purpose of each of the rights in the contract, the language used, and the effect they have for different employee groups. This decision is a relatively simple example of this kind of inquiry, that occurs in many contract interpretation grievances.

The ultimate decision (that I found to be surprising) highlights how parties can negotiate provisions that each finds acceptable without mutually working through the actual operation of those provisions. This can reflect the nature of bargaining (where ambiguous language may be a strategy to, for example, defer a fight), the complexity of language (which can give rise to legitimately different interpretations), and the impact of practical constraints (e.g., bargaining is often done under the gun by very tired people who sometimes make errors of omission).

-- Bob Barnetson

How OHS sentences are determined

Many labour-side practitioners assert that the financial penalties levied against employers that violate occupational health and safety rules are so low that they do not serve as a deterrent to future violations by the same or a different employer (basically, they are just the cost of doing business). In some jurisdictions, employers can be subject to modest tickets or administrative penalties for violations. Where an employer has done something serious, they can also be subject to prosecution under OHS legislation. 

Pleading or being found guilty can result in fines being assessed by the court within whatever range is set in the legislation. Section 48 of the Alberta’s OHS Act, for example, sets the maximum penalty for a first-time violation at $500,000 (plus a 20% victim surcharge) and/or not more than six months of imprisonment. (In theory, employers can also be charged under the Westray provisions of the Criminal Code, but that basically never happens. Similarly, jail time for an OHS prosecution is almost never imposed.)

There were 11 (or maybe 12, see below) convictions in Alberta under the OHS Act in 2022:

• Precision Trenching Inc pled guilty to a 2018 trench collapse fatality and paid a fine of $275k.
• Insituforms Technology Inc pled guilty to a 2019 serious injury and paid a fine of $100k.
• Emcom Services Inc pled guilty to a 2019 serious injury and was fined $86k. (This conviction appears twice on the list, but I think that is an error).
• Amyotte’s Plumbing & Heating Ltd pled guilty to a 2019 fatality and was fined $170k.
• Joseph Ogden pled guilty to a 2019 fatality and was fined $80k.
• Trentwood Ltd pled guilty to a 2020 fatality and was fined $150k.
• The Town of Picture Butte pled guilty to a 2020 serious incident and was ordered to pay $87k in creative sentencing.
• Kikino Metis Settlement pled guilty to a 2020 serious incident and was ordered to pay $8.5k in creative sentencing.
• McCann’s Building Movers Ltd pled guilty to a 2020 fatality and was fine $320k.
• Polytubes 2009 Inc pled guilty to a 2020 serious injury and were ordered to pay $100k in creative sentencing.
• Cross Borders Consulting Ltd pled guilty to a 2020 fatality and was fined $324k.

This is a pretty typical year in terms of numbers and fines. Often employers face multiple charges and, as we saw in 2022, plead out to a single violation and fine.

A recent Saskatchewan Court of King’s Bench sentencing decision following a workplace incident that left a worker paralyzed is helpful in understanding the factors used when the Court’s determine fine levels. The maximum fine available to the judge in Saskatchewan was $1.5 million. Paragraph 12 sets out the factors commonly used to assess penalties.

[10] R v Westfair Foods Ltd., 2005 SKPC 26, 263 Sask R 162 [Westfair Foods] is a seminal case in Saskatchewan for the sentencing of corporations for OHS violations causing injury. At paragraph 38, Whelan J. distilled the essential principles from the case law and academic works as follows:

i. The primary objective of regulatory offences is protection and in the context of occupational health and safety legislation, it is the protection in the workplace of the employee and the general public.

ii. The sentencing principle which best achieves this objective is deterrence and while deterrence may be regarded in its broadest sense and includes specific deterrence, general deterrence is a paramount consideration.

iii. There are numerous factors, which may be taken into account and the weight attributed to each will depend upon the circumstances of each case. The following is not an exhaustive list of factors that may be considered, but they are likely relevant to most occupational health and safety offences:

• the size of the business, including the number of employees, the number of physical locations, its organizational sophistication, and the extent of its activity in the industry or community;
• the scope of the economic activity in issue - the value or magnitude of the venture and any connection between profit and the illegal action;
• the gravity of the offence including the actual and potential harm to the employee and/or the public;
• the degree of risk and extent of the danger and its foreseeability;
• the maximum penalty prescribed by statute;
• the range of fines in the jurisdiction for similar offenders in similar circumstances;
• the ability to pay or potential impact of the fine on the employer's business;
• past diligence in complying with or surpassing industry standards;
• previous offences;
• the degree of fault (culpability) or negligence of the employer;
• the contributory negligence of another party;
• the number of breaches - were they isolated or continued over time;
• employer's response - reparations to victim or family - measures taken and expense incurred so as to prevent a re-occurrence or continued illegal activity, and;
• a prompt admission of responsibility and timely guilty plea.

This decision also helpfully discusses the law on sentencing when government amend legislation to raise fine levels. Paragraph 18 quotes the Nova Scotia Supreme Court’s decision in Hoyeck:

[25] … For Courts to give "the legislative intent its full effect" we cannot be bound to prior sentencing ranges that do not reflect the Legislature's view of the gravity of the offence and society's increased understanding of the severity of the harm arising from the offence (see paras. 108-109). An upward departure from prior precedents is appropriate to arrive at a proportionate sentence.

As set out in Paragraphs 24 and 25, the Saskatchewan judge fined King Stud $126k (effectively one year of net proceeds) to be paid of a time period to be determine later. The range of fines

[24] A total penalty (fine and surcharge) of roughly one year’s net proceeds to the principals of the corporation, with time given to pay, is a proper balancing of all of the factors in this case - including the fact that, other than its early guilty plea, virtually none of the Westfair Foods factors are in King Stud’s favour, and some of them (such as its compliance record before and after this incident) are strongly against it.

[25] Such a fine will be a very significant penalty to the principals of the corporation but should not be so debilitating as to cause the collapse of King Stud. Will it be extremely uncomfortable for them for several years? Undoubtedly; but not nearly so uncomfortable as the rest of Dawson Block’s life will be for him, as a result of their actions or inaction.

It’s hard to know if this fine will cause the employer (which had an appalling safety record before this entirely foreseeable injury) to alter its behaviour or serve as a deterrent to other employers. I’m pretty skeptical. These were bad actors who got busted after the fact for yet another fall protection violation.

An interesting part of the discussion was the court’s efforts to set the fine at a level that served as a deterrent but was not so high that the owners of the corporation just walked away from the corporation (and thus the fine goes unpaid). The impact of limited liability corporations to shield owner-operators from some or all of the consequences of the corporation’s actions is a recurring bugbear for enforcing employment laws.

Perhaps, rather than further raising fine maximums (which seems to have a modest impact on actual fine levels) and perhaps fine minimums, legislatures might consider piercing the corporate veil to hold directors personally liable for unpaid OHS fines?

-- Bob Barnetson