House of Lords in UK Finds Pleural Plaques not Compensable

The United Kingdom’s highest court recently decided unanimously in the Rothwell decision that workers who have been exposed to asbestos in the course of their employment and have developed pleural plaques (a condition involving benign growths in the lining of the lungs caused by asbestos exposure) are not eligible to claim compensation in negligence.

Previously, on February 15, 2005, ten pleural plaques test cases at the trial level had been successful in arguing that the workers were entitled to compensation on the basis that the condition, considered in light of the anxiety caused and combined with the risks of developing an asbestos-related disease in the future, amounted to a complete cause of action.

The Court of Appeal subsequently overturned the decision on January 26, 2006, finding that the plaques themselves are harmless and do not constitute a cause of action. The Court of Appeal held that three unactionable “injuries” do not amount to an actionable injury when considered in the aggregate.

The House of Lords considered three issues in their judgment:

i) whether the existence of pleural plaques entitled the workers to bring an action in tort for damages against their employers who had negligently exposed them to asbestos;

ii) alternatively, if the condition of plaques on its own is insufficient, whether the presence of the plaques combined with the anxiety they caused and the risk of future disease would suffice to create a cause of action in tort for damages; and

iii) in relation to only one appellant, whether an individual suffering from a psychiatric illness caused by his anxiety about the possibility of developing an asbestos-related disease, can give rise to a cause of action in tort.

The House of Lords held that, although pleural plaques can be detected by X-ray, the plaques themselves are not actionable because they do not constitute real damage. Since the plaques do not cause any symptoms, nor do they cause any measurable harm in the subject’s health or capability, they cannot constitute damage, which is necessary to claim compensation in negligence.

At paragraph 47 of the decision, Lord Hope states,

an injury which is without any symptoms at all because it cannot be seen or felt and which will not lead to some other event that is harmful has no consequences that will attract an award of damages. Damages are given for injuries that cause harm, not for injuries that are harmless.

With regard to the “aggregation theory”, the Lords further held that the plaques, when combined with the risks of suffering further injury associated with asbestos exposure (but unrelated to the plaques) and anxiety about such risks, did not in the aggregate amount to sufficient injury to constitute a cause of action in negligence.

The Lords also rejected the claim of the appellant, who claimed that he had suffered from depression as a result of his deep-seated fear of developing asbestos-related disease, finding that he did not have a cause of action for his psychiatric illness because it was not reasonably foreseeable that exposure to asbestos would cause psychiatric injury.

Although this decision from the House of Lords makes it clear that British claimants will not be able to recover damages in negligence for their pleural plaques, a majority of the Lords noted that the workers could potentially seek compensation based on breach of contract of employment. As an aside, Lord Scott referred to an employer’s “contractual duty of care” when exposing workers to asbestos in the workplace, including the duty to provide a safe workplace environment. Because breach of contract does not require claimants to demonstrate actual damage, it remains to be seen whether future claimants will be successful by framing their claims under contract law. The extent to which this decision will impact upon Canadian employers also remains to be seen.

La Cour suprême du Canada explique le devoir d’accommodement

Dans sa décision récente, Hydro-Québec c. Syndicat des employées de techniques professionnelles et de bureaux d’Hydro-Québec, section locale 2000 (SCFP-FTQ), la Cour suprême du Canada a expliqué l’étendue du devoir d’accommodement d’un employeur lorsqu’un employé est congédié pour des absences liées à un handicap.

L’employée a travaillé chez Hydro-Québec pendant 24 ans avant son congédiement. Entre 1994 et 2001, malgré les mesures d’accommodement offertes par l’employeur, elle a été absente pendant 960 jours à cause d’une variété d’handicaps physiques et psychologiques. Après avoir obtenu l’expertise de la part de trois psychiatres, l’employeur a conclu que l’employée était incapable de travailler sans s’absenter. L’employée a été congédié.

Dans une décision unanime, la Cour suprême du Canada a conclu que le critère de contrainte excessive n’exige pas qu’un employeur établisse qu’il est impossible d’accommoder l’employée. La question que doit poser les tribunaux sur les droits de la personne est à savoir s’il est impossible pour l’employeur d’accommoder l’employée sans subir une contrainte excessive. Au paragraph 17 de sa décision, la Cour énonce le principe suivant:

« […] en cas d’absentéisme chronique, si l’employeur démontre que, malgré les accommodements, l’employé ne peut reprendre son travail dans un avenir raisonnablement prévisible, il aura satisfait à son fardeau de preuve et établi l’existence d’une contrainte excessive. »

La Cour suprême a finalement énoncé que le devoir d’accommodement d’un employeur n’est pas éternel, et a confirmé que l’objet du devoir d’accommodement est d’assurer qu’un employé qui en est capable puisse travailler :

« En pratique, ceci signifie que l’employeur doit offrir des mesures d’accommodement qui, tout en n’imposant pas à ce dernier de contrainte excessive, permettront à l’employé concerné de fournir sa prestation de travail. L’obligation d’accommodement a pour objet d’empêcher que des personnes par ailleurs aptes ne soient injustement exclues, alors que les conditions de travail pourraient être adaptées sans créer de contrainte excessive. »

La décision est claire et précise – dans des cas d’absentéisme chronique lié à un handicap, les employeurs doivent chercher des solutions d’accommodement pour aider l’employé a réintégré le travail. Ces mesures doivent être adaptées aux besoins de l’employé. Les tribunaux sur les droits de la personne et les cours de justice continueront a exigé une preuve de tels efforts. Par contre, lorsque l’employé ne peut reprendre son travail dans un avenir raisonnablement prévisible, malgré les mesures d’accommodement, l’employeur pourra établir la contrainte excessive.

Amendments to Alberta’s Labour Relations Code

On June 9, 2008, Bill 26 received Royal Assent in Alberta. The bill, which will come into effect on proclamation, introduces three main changes to the Labour Relations Code:

1. Ambulance attendants are prohibited from striking and their employers are prohibited from locking them out. The parties must instead arbitrate their disputes.

2. Building Trade Unions are prohibited from contributing to Market Enhancement Recovery Funds (MERFs). MERFs are used by union contractors to subsidize employees’ pay, which reduces the employer’s payroll costs to the extent of the MERF subsidy and makes the union contractor’s bid more competitive than bids by non-union contractors. Current MERF funds are to be distributed by the union as set out in the trust agreement or collective agreement, or as directed by the regulations.

3. Bill 26 introduces changes to the certification process in the construction sector. New hires who have been employed for less than 30 days and employees who quit between the time of the application for certification and the secret ballot vote will no longer be eligible to participate in the certification vote. Additionally, employees will be entitled to revoke the certification within 90 days. These changes are intended to prevent “salting”, the union practice of sending employees to work at non-union construction sites in order to sway certification votes.

Unilateral Changes to the Employment Contract: Ontario Court of Appeal Changes the Legal Test

In the recent decision of Wronko v. Western Inventory Service Ltd., the Ontario Court of Appeal muddied the waters with respect to an employer’s obligations when seeking to unilaterally modify an existing employment contract.

Wronko had been employed by Western Inventory for seventeen years. When a new company President was appointed, the President asked Wronko to sign an amendment to his employment contract that reduced his severance pay entitlement from two years to thirty weeks. When Wronko refused, the President gave him formal notice that, after two years, the amendment would be unilaterally imposed. Wronko continued to object to the change. After two years, the President indicated that the amendment had taken effect and that, if Wronko refused to sign the amended agreement, he would not have a job. Understanding his employment to be terminated, Wronko did not report for work and sued his employer for wrongful dismissal.

The trial judge found that an employer is allowed to unilaterally change a fundamental term of an employment contract as long as the employee is given reasonable notice of the change. The judge concluded that Wronko had terminated the employment relationship by refusing to continue to work under the new terms, and dismissed his claim.

The Court of Appeal overturned the trial judge’s decision. In its reasons, the Court explained that three options are available to an employee when his or her employer unilaterally amends a fundamental term of the employment contract:

1. The employee may accept the change, and his or her employment will continue under the new terms;

2. The employee may reject the change, take the position that he or she has been constructively dismissed, and sue for damages; or

3. The employee may demonstrate that he or she is rejecting the change but continue to work. In that case, the employer may respond in one of two ways: the employer may terminate the employee with proper notice and offer re-employment on the altered terms, or the employer may allow the employee to continue to work, in which case the employee is entitled to insist on the terms of the original contract govern.

The Court of Appeal held that Wronko’s situation fell into the third category and, since the employer did not terminate Wronko and offer him re-employment on the new terms, it must be deemed to have accepted that the original contract would remain in effect. Since the Court considered the President’s final communication to Wronko to be a termination, it awarded Wronko two years pay in lieu of notice, in accordance with the terms of his original contract.

Prior to this decision, employers could make unilateral changes by providing advanced reasonable notice of the change, and at the end of the notice period, the change was effective. The Court of Appeal now requires an employer to terminate the employee at the end of the notice period, and offer re-employment under the new terms for the change to be enforceable. We are of the view that the Court of Appeal’s decision is incorrect and creates an overly legalistic approach to a simple issue. Unfortunately, the Supreme Court of Canada has refused to intervene and has denied the employer’s leave to appeal. Time will tell whether this decision will become a precedent requiring the intervention of the Supreme Court to rectify.

Supreme Court Clarifies Employers’ Duty to Accommodate

In the recent decision of Hydro-Québec v. Syndicat des employées de techniques professionnelles et de bureaux d’Hydro-Québec, section locale 2000 (SCFP-FTQ), the Supreme Court clarified the scope of an employer’s duty to accommodate when terminating an employee for disability-related absenteeism.

The employee had worked for Hydro-Quebec for 24 years. Between 1994 and 2001, despite the employer’s attempts to accommodate her, she missed a total of 960 days of work due to a variety of physical and mental disabilities. After obtaining expert reports from three psychiatrists, the employer concluded that the employee was unable to work on a regular and reliable basis and therefore terminated her for excessive innocent absenteeism.

The employee grieved her termination. The arbitrator dismissed the grievance on the basis that the medical information confirmed that the employee would likely continue to miss work in the foreseeable future. Furthermore, the arbitrator concluded that the accommodation measures suggested by the union would constitute undue hardship for the employer. The Quebec Superior Court dismissed the union’s motion for judicial review of the arbitrator’s decision.

The Quebec Court of Appeal allowed the union’s appeal, setting aside the arbitrator’s decision on the basis that it was not “impossible” for the employer to accommodate the employee and that the duty to accommodate must be assessed at the time of the decision to terminate the employee.

The Supreme Court of Canada overturned the decision of the Court of Appeal. In a unanimous decision, the Court discussed the interpretation and application of the Meiorin test, which determines whether an employer has met its duty of reasonable accommodation. The Supreme Court found that the Court of Appeal had erred in concluding that the third part of the Meiorin test required evidence that it was impossible for the employer to accommodate the employee. Rather, the issue is whether it is impossible for the employer to accommodate the employee to the point of undue hardship. At paragraph 17 of its decision, the Supreme Court states:

[…] in a case involving chronic innocent absenteeism, if the employer shows that, despite measures taken to accommodate the employee, the employee will remain unable to resume his or her work in the reasonably foreseeable future, the employer will have discharged its burden of proof and established undue hardship.

The Supreme Court found that the Court of Appeal had erred by assessing the duty to accommodate at the time when the employer made the decision to dismiss the employee. Rather, the duty to accommodate must be assessed globally, and take into account the entire history of absenteeism and accommodation.

Based in part on the employer’s past attempts to accommodate the employee, and her continued absenteeism, the Supreme Court found that the employer had reached undue hardship, and upheld the termination.

The Supreme Court has finally clarified that the employer’s duty to accommodate is not endless, and confirms that the goal of the duty to accommodate is to ensure that the employee who is able to work can do so:

“In practice, this means that the employer must accommodate the employee in a way that, while not causing the employer undue hardship, will ensure that the employee can work. The purpose of the duty to accommodate is to ensure that persons who are otherwise fit to work are not unfairly excluded where working conditions can be adjusted without undue hardship.”

The decision makes it clear that, in cases of disability-related absences, employers are required to find accommodative measures which will assist the employee in returning to work. Accommodation measures are to be tailored to the specific needs of the employee. Human rights tribunals, arbitrators and courts will continue to expect evidence of these efforts. However, employers can now rest assured that, where there is no foreseeable improvement to the attendance record notwithstanding the accommodation measures implemented, there is a point of undue hardship.

Nunavut Increases Minimum Wage

On September 5, 2008, Nunavut’s Bill 33, An Act to Amend the Labour Standards Act, came into effect, resulting in an increase in the minimum wage from $8.50 per hour to $10.00 per hour. The rate will apply to all workers, regardless of age. Intended to reflect the territory’s high cost of living, the increase makes it the highest minimum wage in Canada.

Changes to Canadian Immigration Benefit Employers

The federal government has recently made several significant changes to Canadian immigration policies that will result in benefits to employers.

In respect of temporary workers, changes have been made to allow certain workers to receive a North American Free Trade Agreement (NAFTA) work permit for a duration of three years, instead of one year. American and Mexican workers who want to work in Canada temporarily and who meet the eligibility criteria in one of over 60 identified professions will be able to apply for the new, longer permits. This change will make it easier for Canadian employers to employ skilled temporary workers for longer periods of time.

Important changes have also been made to permanent worker programs. One such change arises from the introduction of the Canadian Experience Class (CEC). The CEC creates a new way for temporary foreign workers and international students with Canadian work experience to continue their employment by securing permanent residency in Canada.

The CEC sets up a pass-fail system, rather than a point system, for workers who meet certain work or student experience requirements. The pass-fail system means that applicants possessing benchmark language skills and the requisite work and/or student experience will pass, and obtain permanent residency shortly thereafter. The CEC ensures that Canadian work experience is the key selection factor for applicants in the class.

Under the CEC, temporary foreign workers who have had at least two years of Canadian professional, managerial or skilled work experience will qualify for permanent residency. International graduates from certain Canadian post-secondary programs will also be entitled to apply for immigration if they have had at least one year of full-time work experience in a professional, managerial or skilled position. Qualified applicants may apply while still living in Canada, or within one year after having left the country.

The creation of the CEC provides many benefits to the Canadian labour market in general, and to employers that employ skilled foreign workers specifically. By making it faster and easier for certain temporary workers to attain permanent residency, the CEC encourages skilled and educated workers to remain in Canada and helps employers retain the talent they need. In addition, since qualified applicants may now apply for permanent residency without leaving Canada, their employers can enjoy the benefit of a continuous employment relationship, uninterrupted by a lengthy application process.

In addition to creating a new class for workers with Canadian experience, the federal government has also introduced changes to the point system for other skilled workers who do not have Canadian experience. Bill C-50 reintroduces an occupation list, and creates three categories of workers whose applications will receive expedited processing. The categories include workers with at least one year of experience in one of 38 high-

demand occupations in management or the skilled trades, workers with pre-arranged employment, and workers who have been working or studying in Canada for at least one year. The introduction of an expedited process should result in immigration being more responsive to the needs of the Canadian marketplace and Canadian employers.

Employee Who Changed Positions Not Bound by Original Contract When Terminated

In Ling v. Unity Builders, the Alberta Court of Queen’s Bench held that, when there has been a significant change to the nature of a person’s employment, a contract entered into before the change will cease to govern, and the termination of the employee will accordingly be governed by common law principles.

Ling entered into an employment contract for the position of General Manager with a house building company that operated within a group of companies. The contract provided for a bonus worth five percent of the company’s net income, and for termination at any time with two months’ notice. Eventually, Ling became General Manager of two more companies in the group, and received a bonus of ten percent from each company. However, no written agreement was entered into to reflect these changes. Finally, Ling was promoted to President of the three companies, received a salary increase, and began to receive his pay from the companies’ management company, and not from the company that had originally employed him. At no point did Ling receive a new employment contract, despite his request for one.

A dispute arose and Ling was terminated without cause. He received three months’ salary in lieu of notice. Ling subsequently commenced a wrongful dismissal action.

The Alberta Court of Queen’s Bench allowed Ling’s action. The Court reasoned that privity of contract existed between Ling and his original employer. However, at the time of Ling’s dismissal, he was not employed by his original employer, but rather by the group of companies. Therefore, the contract initially entered into was no longer enforceable at the time of Ling’s termination. Since no contract was in place, his termination was governed by the common law.

The Court awarded Ling four months’ notice. The Court based its conclusion on the fact that he was fifty years old at the time of trial and had been in an upper management position notwithstanding that his employment had been of relatively short duration and that, for over half of this employment, his entitlement to notice had been limited to two months.

This decision highlights for employers the importance of having an employee sign a new employment contract whenever there has been a promotion or other change in position. If the employer fails to do so, the employee’s entitlement to notice on termination may not be limited by the terms of the original contract, and may instead be determined by the common law.

Workers’ Compensation Coverage to be Mandatory in Construction Industry

On November 27, 2008, Bill 119, the Workplace Safety and Insurance Amendment Act, 2008, received Royal Assent. The Act makes workers’ compensation coverage mandatory for independent operators, sole proprietors, partners and executive officers of corporations working in the construction industry.

Members of the construction industry will be required to register with the Workplace Safety and Insurance Board (WSIB), and contractors will be required to obtain a clearance certificate stating that any independent operators working for them are registered with the Board and have complied with their own obligations under the Act. In addition, a contractor who directly retains a member of the industry to perform construction work may be liable to pay premiums in respect of that worker. However, the Act does create an exemption for members of the industry who only do home renovation work directly for homeowners.

In addition to the above requirements, the Act may also impose additional responsibilities on employers in the industry. The Act empowers the WSIB to create a system to identify all construction workers which, if established, may require employers to provide detailed information to the Board, including the names of workers and information about their earnings.

While the Act is not expected to come into effect until 2012, employers are invited to contact the lawyers at Bird Richard to discuss whether and to what extent these changes will affect their operations.

Employment Standards Update: Increased Protection for Temporary Workers

One recent amendment and one proposed amendment to the Employment Standards Act, 2000 (ESA) will have a significant impact on employers who employ elect to work and temporary help employees.

As of January 2, 2009, employees who work under arrangements whereby they may choose whether or not to work when requested are entitled to holiday pay, or the designation of an alternate day off in lieu of holiday pay. Family Day in February was the first holiday on which elect to work employees were entitled to public holiday pay.

Bill 139, Employment Standards Amendment Act (Temporary Help Agencies), 2008, was introduced by the Ontario government in December in an attempt to create additional protections for temporary workers. The Bill requires temporary help agencies to provide specific information to their employees, including information about the agency itself, the client to whom the employee is assigned to work, and the employee’s rights under the ESA.

In the spirit of removing barriers that prevent temporary employees from attaining permanent employment, the amendment would prohibit temporary help agencies from any of the following:

  • Charging a fee to an employee for employment, assignment to a client, or job search assistance;
  • Restricting an employee from entering into an employment relationship with a client of the agency; and
  • Charging a “finder’s fee” or “temporary to permanent fee” to an employee or a client in respect of an employee who began to work for the client at least six months earlier.

In anticipation of a future amendment that would remove the exemption of temporary employees from the ESA’s termination and severance provisions, Bill 139 also sets out the method by which termination and severance pay for temporary workers is to be calculated. The Bill states that a temporary worker will be deemed to have been terminated when he or she has not been assigned work for 35 consecutive weeks.

Bill 139 was carried after its second reading, and was referred to a standing committee on March 2, 2009. If it receives Royal Assent, it will come into force six months after that date.

The above amendments will have both positive and negative implications for employers who use temporary help agencies. On the one hand, Bill 139 will make it easier and more affordable for businesses to transition employees from temporary workers to permanent staff. However, employing temporary staff may become more expensive, given that public holiday pay is now required, and termination and severance pay may soon become applicable to temporary workers.