A recent decision of the Ontario Superior Court of Justice illustrates the challenges employers can face when attempting to enforce a signed release. In Swampillai v. Royal & Sun Alliance Insurance Company of Canada, 2018 ONSC 4023 (CanLII), the Court was asked to consider on a motion for summary judgment on whether or not the release signed by Mr. Swampillai at the time of the termination of his employment barred him from pursuing a claim for long term disability benefits. Justice Cavanaugh found that Mr. Swampillai had signed the release under circumstances that were unconscionable and, as such, the release could not prevent him from pursuing a claim for long term disability (LTD) benefits. Mr. Swampillai was thus free to continue his action against his former employer, Royal & Sun Alliance Insurance Company of Canada (RSA) and Sun Life Assurance Company of Canada (Sun Life), who acted as the administrator of RSA’s long term disability benefits program, even though the release signed by Mr. Swampillai specifically cited “long term disability benefits” as a released claim. So what went wrong for RSA? To understand the Court’s decision, we need to review the circumstances that existed at the time that RSA and Mr. Swampillai negotiated the severance package.
Mr. Swampillai had worked for RSA as first a contract employee and then a permanent, full-time employee since 2001. He worked as a distribution clerk and in the mail room, with some physical demands like lifting and moving. In or around 2013, he developed certain medical conditions that prevented him from working in his role as a distribution clerk. He first went on short term disability leave and then transitioned to long term disability leave, where he remained for a period of two years. Like many LTD plans, RSA’s LTD distinguished between being disabled from one’s “own occupation” and “any occupation.” After two years of disability, an employee would only qualify for continued LTD benefits if they could show that they were disabled from “any occupation.” If not, they were expected to return to work in some capacity.
Unlike many employers, RSA was self-insured for long term disability benefits. RSA retained Sun Life to adjudicate employee claims for LTD but Sun Life was not responsible for paying these benefits. RSA relied on Sun Life to communicate with employees regarding their claims, collect and review medical evidence and make a determination as to eligibility for benefits.
In March of 2015, Mr. Swampillai was notified by Sun Life that his eligibility for LTD benefits would cease as of July 22, 2015, on the basis that he was not disabled from performing “any occupation.” He was told he had until October 22, 2015, to appeal Sun Life’s decision. On May 12, 2015, Mr. Swampillai appealed the decision and provided further medical information to Sun Life in support of his claim. On June 2, 2015, he received a second denial letter. Again, he was advised that he had until October 22, 2015, to appeal. On June 19, 2015, Mr. Swampillai retained a law firm to assist him with his claim for LTD benefits. Meanwhile, RSA had conducted an evaluation as to whether or not it had alternative work for Mr. Swampillai that would fit his restrictions and had concluded that no such positions were available. Accordingly, it notified Mr. Swampillai by way of a letter dated June 24, 2015, that his employment with the company was being terminated. RSA offered Mr. Swampillai a severance package in exchange for a release of claims against the company. Notably, the June 24, 2015, termination letter from RSA confirmed that Mr. Swampillai’s LTD benefits would end as of July 21, 2015, and the RSA release listed “long term disability benefits” among the released claims. Mr. Swampillai was given until July 22, 2015, to review the offer and sign the release. Mr. Swampillai sent portions of the severance offer to his lawyer, whose assistant advised that he should speak to an employment law specialist about the offer. Mr. Swampillai did not do so. However, he did negotiate a more favourable severance offer with RSA before eventually signing the release on July 14, 2015. Mr. Swampillai gave evidence via affidavit that prior to signing the release, he had notified RSA in a telephone call that he disputed Sun Life’s decision regarding his entitlement to LTD benefits.
In June of 2017, Mr. Swampillai commenced an action against RSA and Sun Life for allegedly unpaid LTD benefits. RSA brought this motion for summary judgment, asking the Court to enforce the release and dismiss Mr. Swampillai’s claim. Mr. Swampillai’s counsel argued that the release was unconscionable and should be set aside. The test for showing that an agreement between two parties is unconscionable has four elements:
On January 1 of this year, Ontario’s Bill 148 officially expanded the reach of the personal emergency leave provisions of the Employment Standards Act, 2000 (the ESA) to not only require all Ontario employers to grant employees 10 personal emergency leave days (PEL days) per year but to require that the first two such PEL days be paid. For Ontario employers already offering employees related, but not identical, paid time off benefits at the time, this naturally led to a number of critical questions: are we already compliant with the ESA? do we need to change the benefits we offer or how we administer them? do we need to pay even more?Read Full Article
Ontario’s provincial government recently announced that the coming into force of the new Smoke-Free Ontario Act, 2017 (SFOA) has been postponed indefinitely to allow time for the new government to re-examine the regulation of vaping.Read Full Article
As you will recall, in April of this year, we brought you an e-LERT examining the Ontario Superior Court’s decision in Bergeron v. Movati Athletic (Group) Inc. 2018 ONSC 885 (Bergeron) – a recent decision where the Court nullified a termination clause designed to limit entitlements on termination to the minimums under the Ontario Employment Standards Act, 2000 (ESA). The reason? The clause lacked a “high degree of clarity” and, paraphrasing the Court, could have benefited from the addition of the word “only.” As such, this ambiguity was resolved in favour of the employee plaintiff rather than her employer, the party who drafted the language in question.1Read Full Article
In an unusual decision, the Ontario Superior Court has allowed a complainant in a workplace sexual harassment investigation to participate in the wrongful dismissal trial of her alleged harasser.Read Full Article
By way of a 52-29 vote, the Canadian Senate has now passed the federal government’s bill legalizing recreational marijuana in Canada. It is now up to the federal government to set a date for formal legalization, with provincial governments receiving an eight to twelve week period to prepare for the sale of the drug within their province. The Bill is expected to receive Royal Assent within a matter of days.Read Full Article
This decision has been anticipated for quite some time. Although the Ontario Human Rights Code (Code) was amended to remove the upper limit on age discrimination and prohibit mandatory retirement in 2006, discrimination in connection with benefit and pension plans based on age continued to be permitted by the Code and the Benefits Regulation under the Employment Standards Act, 2000 (ESA). These distinctions were rationalized based on advice from insurers and independent studies that pension and benefits plans would suffer because of the costs increases expected to be associated with providing coverage for older workers.Read Full Article
Almost three years after the Ontario legislature unanimously passed the Police Record Checks Reform Act, 2015 (the Act), it will come into force on November 1, 2018, making Ontario the first province in Canada to establish a comprehensive legislative regime governing police record checks.Read Full Article
The Ministry of Labour has announced that, as of July 1, 2018, public holiday pay entitlements in Ontario will be calculated using the formula that existed prior to the enactment of the Fair Workplaces, Better Jobs Act, 2017 (FWBJA). Many commentators - including the authors of this blog - had noted that the new formula contained in the FWBJA resulted in a significant windfall for casual employees and arguably unjustified costs for Ontario employers. The Ministry of Labour has responded to these concerns by reinstating the old public holiday rules on an interim basis while it reviews how to simplify public holiday pay entitlements under the Employment Standards Act, 2000 (the ESA).Read Full Article
On April 26, 2018, the Ontario government passed Bill 3, the Pay Transparency Act, 2018. The Pay Transparency Act, 2018 imposes requirements for employers relating to the disclosure of information about the compensation of its employees and prospective employees for the purpose of promoting “gender equality and equal opportunity” in employment. The new legislation follows on the heels of the Ontario government’s recent amendment to the Employment Standards Act, 2000, which came into effect on April 1, 2018, and requires employers to provide equal pay for part-time, temporary and seasonal employees who perform the same job as full-time employees. (Find our previous blog post on Bill 148 here.)Read Full Article
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In Lancia v. Park Dentistry, 2018 ONSC 751, the Ontario Superior Court found that an employee who resigned after her employer provided 18 months’ notice of changes to certain terms of her employment and a signing bonus had not been constructively dismissed.Read Full Article
An amendment to Ontario’s Workplace Safety and Insurance Act, 1997 (WSIA) that expands liability for injuries sustained by temporary help agency employees has been proclaimed into force.Read Full Article
A recent decision of the Ontario Superior Court highlights the importance of including a comprehensive release in any separation package offered to an employee upon dismissal, particularly in the context of the #metoo movement where workplace sexual harassment has become a top concern for employers.Read Full Article
The impacts of Bill 148 continue to be felt by Ontario employers as even more significant changes to the Employment Standards Act, 2000 (the ESA) are starting to come into effect.Read Full Article
On March 6, 2018, the Ontario Government introduced Bill 203, the Pay Transparency Act, 2018, which is intended address wage gaps and increase pay transparency by requiring employers to track and publish employee compensation details.Read Full Article
In a good-news decision for employers, the Ontario Court of Appeal upheld another less than perfect termination provision, adding to its growing collection of decisions on the issue of the enforceability of termination provisions in individual employment contracts.Read Full Article
In connection with the changes to the Employment Standards Act, 2000 coming into force on January 1, 2018, the Ministry of Labour has published a new version of the Employment Standards Poster. Employers are required to post the most recent version of the Employment Standards Poster in the workplace where it is likely to come to the attention of employees and must provide a copy to every employee. The poster must be displayed in English however if the majority language of the workplace is a language other than English, and the Ministry of Labour has published a version of the poster in that language, employers are required to post a copy of the translation next to the English version of the poster.Read Full Article
Ontario employers can be forgiven for a lack of enthusiasm in ringing in 2018. Several significant changes to the Employment Standards Act, 2000 (the “ESA”) come into effect as of January 1, 2018 and many employers are scrambling to ensure that their policies and practices are up to date. However, the ESA amendments are not the only employment issues that should be on your radar for 2018. We’ve put together a short list of suggested New Year’s resolutions to help employers proactively address potential workplace issues in 2018 and beyond.Read Full Article
Cassels Brock recently hosted a seminar highlighting some of the significant changes and implications of Bill 148 and discussing strategies on how to best prepare for these changes to employment standards, enforcement measures and labour relations. You can now watch a videocast of this seminar - featuring Laurie Jessome, Caitlin Russel and Pamela Hinman - here.Read Full Article
On November 27, 2017, Bill 148, the Fair Workplaces, Better Jobs Act, 2017, received Royal Assent. Bill 148 makes significant amendments to Ontario’s Employment Standards Act, 2000 (the ESA), Labour Relations Act, 1995 (the LRA), and Occupational Health and Safety Act (OHSA). Certain amendments under Bill 148 will come into force effective immediately, with other amendments coming into force on December 3, 2017, January 1, 2018, and throughout 2018 and 2019.Read Full Article