Posts Tagged ‘employment law’

Shafik Bhalloo
Tuesday, April 29th, 2014    Posted by Shafik Bhalloo (posts) and Devin Lucas (posts)
Shafik Bhalloo
Shafik Bhalloo has been a partner of Kornfeld LLP since 2000. His practice is focused on labour and employment law, and on commercial and civil litigation. He is also an Adjudicator on the Employment Standards Tribunal and an Adjunct Professor in the Faculty of Business Administration at Simon Fraser University.
Devin Lucas
Devin Lucas maintains a general civil litigation practice with a focus on corporate and commercial litigation and landlord tenant and real property disputes. His commercial litigation experience includes contractual disputes, employment matters, and debtor-creditor law.


The steps to receiving a suspension when appealing a determination of the Director of Employment Standards (the “Director”) to the Employment Standards Tribunal (the “Tribunal”) can be confusing and full of potholes, so it is best to plan ahead and know the terrain.  For applicants wanting to map out their route, this article will provide a brief primer of the law governing a suspension request when appealing a determination by the Director.  It will also serve as a practical guide for adjudicators who are reviewing these applications.  Part I examines the statutory scheme behind this remedy.  Part II documents a number of previous decisions where suspensions have been ordered and where they have been refused, as well as decisions regarding reconsideration of appeals and suspension orders rendered moot.  Part III sets out five common errors made by applicants and seven instructive principles for consideration by both applicants and adjudicators.


Section 113 of the Employment Standards Act (the “Act”) and Rule 31 of the Tribunal’s Rules of Practice and Procedure (the “Rules”) govern requests to suspend a Director’s determination.  The two provisions are complementary and should be viewed collectively by an applicant seeking a suspension of a determination:

Director’s determination may be suspended


(1)        A person who appeals a determination may request the tribunal to suspend the effect of the determination.

(2)        The tribunal may suspend the determination for the period and subject to the conditions it thinks appropriate, but only if the person who requests the  suspension deposits with the director either

(a)        the total amount, if any, required to be paid under the determination, or

(b)        a smaller amount that the tribunal considers adequate in the circumstances of the appeal.

Rule 31           Request to Suspend a Determination

Requirements for application to suspend a determination

(1)        In order to request a suspension under s. 113 of the Act an appellant or applicant must, in writing, at the same time as filing the appeal or application for reconsideration:

(a)        state the reasons for the request to suspend the determination;

(b)        state the amount to be deposited with the Director; and

(c)        if that amount is less than the amount required to be paid by the Director, state the reasons why depositing a lesser amount would be adequate in the circumstances.

Notice of suspension request

(2)        The Tribunal may notify the other parties of the request to suspend the determination and set a time limit for responding to the request.

Suspension decision

(3)        If the request is not otherwise resolved, the Tribunal will advise the parties in writing of its decision on the request.

Section 113(1) of the Act grants an applicant appealing a determination the ability to seek a suspension of a determination pending an appeal; subsection (2) gives the Tribunal the authority to consider such an application.  The language of subsection (2) is permissive and vests in the Tribunal the sole discretion to grant a suspension.  As such, a suspension is not granted by the Tribunal as a matter of course.  Further, respondents are given the opportunity to file submissions in response to an applicant’s suspension request.

Subsection (2) holds that the Tribunal is to exercise its discretion to suspend a determination subject to terms and conditions considered sufficient by the Tribunal.  The Tribunal has the option of ordering either the total amount, if any, required to be paid under the determination to be deposited with the Director, or a smaller amount that the Tribunal considers appropriate in the circumstances of the appeal.  The amount is held in trust by the Director pending a further order by the Tribunal on the merits of the appeal.

Rule 31(1) goes further and explains the procedural requirements governing a suspension request.  It requires the applicant to submit in writing, “at the same time as filing the appeal or application for reconsideration”, the reasons for the request to suspend the determination, the amount the applicant is willing to deposit with the Director, and if that amount is less than the full amount ordered by the Director in the determination then the reasons why the lesser amount would be adequate in the circumstances.

It is important to note that an applicant is only permitted to request the Tribunal to suspend a determination that was issued pursuant to section 79 of the Act.  Section 113 does not apply in respect of a determination issued under section 119.  Section 119 deals with reciprocating jurisdictions under the Act and allows an employee in a reciprocating jurisdiction to have an order from that jurisdiction enforced in British Columbia.  Pursuant to section 119, a determination can be appealed, but only to the Supreme Court of British Columbia and not to the Tribunal.  Accordingly, only the Supreme Court of British Columbia has the authority to suspend a section 119 determination.


Numerous Tribunal decisions have considered section 113 applications.  The practice that has emerged recently with respect to these decisions is for the Tribunal to issue its reasons on an application to suspend the effect of a determination separately from the reasons regarding the actual merits of an applicant’s appeal.

A.        Suspensions Ordered

The 1997 Tribunal ruling in Tricom Services Inc.[1] is a leading decision on the factors that a Tribunal must evaluate when considering a suspension of a determination request.  In that decision, a security business appealed a determination by the Director, whereby the employer was ordered to pay the total sum of $34,076.82 representing unpaid wages and interest.  The employer, Tricom Services Inc. (“Tricom”), also sought a suspension of the determination pending the outcome of the appeal.

The Tribunal released an initial decision regarding the employer’s request to suspend the determination.  The Director strenuously objected to the suspension request because the company was in a financially precarious position.  The Director raised the concern that if the determination was suspended without any monetary deposit the employees would be severely financially prejudiced.  In response, the employer stated that although it was able to pay the full amount of the determination, such payment would have a significant negative effect on its cash flow and, on the basis of its strong meritorious appeal, the suspension ought to be ordered with no, or very little, money being deposited.

In its preliminary decision on the suspension request, the Tribunal made reference to two earlier Tribunal decisions.  First, the Tribunal distinguished Motion Works Group Ltd.[2], where the Tribunal ordered the suspension of a determination (in the amount of $16,039.58) upon deposit of the sum of $5,000.  In Motion Works Group Ltd., the Tribunal issued an order suspending the determination primarily for the reason that the determination appeared to overstate the unpaid wage entitlement of the employees.  The Tribunal, in Tricom, noted that, unlike the case at bar, the allegation had been particularized in Motion Works Group Ltd.  In that regard, the Tribunal stated:

… Tricom simply makes a general assertion that the Determination may be in error as to the calculation of the amounts due to the various employees.  However, given that the Determination was based on Tricom’s own payroll records, I would have thought it not a Herculean task for the appellant to more fully particularize its claim that the Determination contains calculation errors.

Despite the lack of particularity regarding the Director’s apparent overstatement of wages, the Tribunal was satisfied that the employer’s appeal may be meritorious.  The Tribunal went on to consider the Tribunal decision in TNL Paving Ltd. et al.[3]  In TNL Paving Ltd. et al., the Director had opposed a suspension request on the basis that if the determination was suspended, an ongoing investigation would be prejudiced.  The Director had issued a determination that the records pursuant to an earlier Demand by the Director could be utilized in an investigation into whether the employers had complied with its statutory obligations.  This was a unique case as the determination did not involve a monetary order.  The Director, in response to the applicant’s request, had opposed it as it submitted only determinations for a specific monetary sum could be suspended.  The Tribunal noted that section 113(2)(a) referred to depositing with the Director the “total amount, if any…”.  In the Tribunal’s opinion, the words “if any” specifically contemplated an applicant seeking a suspension of a determination that did not involve the payment of money.  Further, the Tribunal found that the Director’s submission that it would be prejudiced if a suspension was granted failed for lack of particularity.  The Director had not established how it would be prejudiced if the determination were to be suspended.

Similarly, the Tribunal in Tricom Services Inc.[4] found that the general claim of prejudice on the part of the employer regarding its cash flow was insufficient to justify an order to suspend the determination upon deposit of little or no monetary security.  According to the Tribunal, the adequacy of any proposed deposit must be viewed not only from the perspective of the employer, but from the point of view of the employees as well, as their rights could be affected by a suspension order.  The Tribunal took into account the fact that Tricom appeared to be having financial difficulties and there was a risk that the employees would not be able to recover their unpaid wages. The Tribunal ordered that the determination be suspended until the appeal had been heard or decided, or until further order of the Tribunal, on the condition that Tricom deposited with the Director the full amount of $34,076.82 required to be paid under the determination.

The Tribunal in Miller[5] provided a useful summary of the governing principles in a section 113 application.  In this decision, the Tribunal Member approved of a two-stage analysis for adjudicators considering section 113 suspension applications.  First, the Tribunal should determine whether it should suspend the determination.  If the Tribunal decides that a suspension is warranted, it should then contemplate what terms and conditions are appropriate in the circumstances.  In considering whether it should suspend the determination, the Tribunal should consider whether the grounds of appeal appear to raise a “justifiable issue” based on any of the three statutory grounds of appeal.  Moreover, at this stage, the Tribunal ought to consider whether the applicant will likely endure unreasonable financial hardship if a suspension order is not granted and whether one or more of the respondent parties will be unjustly prejudiced if a suspension order is granted.  If the Tribunal is satisfied that a suspension order is justified, the “default” order is that the full amount of the determination be paid into trust with the Director pending the outcome of the appeal.  If, however, the applicant seeks an order that a lesser sum be deposited, the applicant must establish why that would be appropriate taking into account all the relevant circumstances.

The Tribunal Member recognized that an appeal from a decision of the Director does not grant a right to the applicant for a fresh trial.  On this basis, he advised that the Tribunal should not suspend a determination if the applicant’s appeal documents fail to raise, on their face, an arguable case that the appeal might succeed on one or more of the enumerated grounds of appeal pursuant to section 112 of the Act.  As such, the Tribunal Member warned that a general claim that the Director failed to observe the principles of natural justice in making the determination will not be adequate.  The Tribunal Member identified that the applicant is the party that bears the burden of satisfying the Tribunal, on a balance of probabilities, that a suspension order is warranted.

In light of these principles, the Tribunal found in Miller[6] that the applicant raised an arguable case, but had failed to provide any support for its contention that the award would raise undue financial hardship.  Therefore, the Tribunal Member ordered that the suspension order should be granted provided the appellant deposit the full sum required to be paid under the determination.

The Tribunal in Kootenai Community Centre Society[7] was asked to consider a request for suspension of a determination requiring a non-profit society to pay $18,171.74, representing wages and accrued interest owed to a former employee and an administrative penalty in the amount of $500.00.  The society deposited the amount of $7,359.75 with the Director in its appeal.  This amount reflected what the society submitted was the employee’s entitlement less statutory deductions.  The society also gave an undertaking to pay out the outstanding balance of the award, if necessary, following the Tribunal’s decision on the merits.  The Tribunal found that the society’s submissions regarding the substantive aspects of the appeal had merit.   Further, the Tribunal considered the fact that neither of the respondents had taken a position with respect to the suspension application and found that the granting of the suspension would not be prejudicial towards these parties.   In the end, the Tribunal concluded that a suspension order was warranted and that the lesser amount was sufficient to act as security pending the outcome of the appeal.

In many section 113 suspension application decisions, the Tribunal takes a middle of the road stance that seeks to balance the competing interests of the applicant and the respondent.  This was illustrated in the Tribunal decision of Wen-DI[8], in which the Tribunal fashioned a creative remedy that sought to satisfy the interests of both the applicant and the respondent.  In that case, the applicant employer requested that the determination ordering the applicant to pay $10,451.36 be suspended upon the deposit of $1,200 with the Director pending the appeal.   The applicant raised the issue of potential cash flow problems. In response, the Director submitted that the full amount ought to be deposited.  The Tribunal felt neither proposal was appropriate.  The Tribunal framed an order that secured the employee’s claim while, at the same, did not unduly constrain the employer’s cash flow.  The Tribunal accomplished this by ordering the applicant to provide to the Director an irrevocable letter of credit in favour of the Director for the full amount ordered to be paid under the determination.

In Chatzispiros[9], the Director issued a determination against a number of related companies, including 553334 B.C. Ltd., for $435,905.05 on account of unpaid regular wages, statutory holiday pay, vacation pay, individual compensation for length of service and group termination pay owed to 64 former employees of an intermediate care facility.  A subsequent determination was issued against Kosta Chatzispiros, in the amount of $121,253.56, in his capacity as a director and officer of 553334 B.C. Ltd.  In his suspension request, Mr. Chatzispiros claimed that if he was required to pay the full amount of the determination, he would be forced to file for bankruptcy.  According to Mr. Chatzispiros, a deposit of $1,000 would be suitable in the circumstances of the appeal.  The Director took the position that 10 percent of the determination would be an adequate, being $12,125.  The Tribunal agreed with the Director’s proposal given the fact that $1,000 was inadequate security for the 64 complainant employees, the lack of merit of Mr. Chatzispiros’s appeal, and that it appeared the applicant had no intention of paying the determination amount should it be upheld on appeal.  As such, the Director ordered that the determination be suspended provided the applicant deposited $12,125 with the Director.

In Holt[10], William Holt was found personally liable for two months of unpaid wages, in the total amount of $11,786.67.  The Director had found that Mr. Holt, as a director or officer of a software company, had breached the Act by failing to pay regular wages to a former employee.  Mr. Holt appealed the determination and requested a suspension of the determination.  Counsel for Mr. Holt submitted that Mr. Holt was retired and requiring a deposit of any amount would cause a considerable hardship to the applicant.  The Tribunal found that Mr. Holt had made out an arguable case, and that his appeal had some merit.  On this basis, the Tribunal suspended the effect of the determination.  Because of the fact that Mr. Holt was retired, the Tribunal considered it appropriate that the entire amount be suspended pending the result of the appeal.

B.        Suspensions Refused

In the Tribunal decision in RTS[11], an employer requested a suspension of the effect of a determination, in the amount of $4,346.78, pending the outcome of a hearing and a final decision made by the Tribunal.  The Tribunal quoted with approval a passage from the leading decision of Tricom Services Inc.[12], where the Tribunal stated:

… it is important to note that the legislature has provided, as a first proposition, that a suspension should only be ordered if the ‘total amount’ of the determination is posted; a ‘smaller amount’ should only be ordered if such lesser amount would be ‘adequate in the circumstances of the appeal’.

The Tribunal Member noted that there was not any indication in the appeal that the employer deposited any amount with the Director that was required to be paid pursuant to the determination.  Without some indication that that this condition has been fulfilled, or that the Tribunal approved of a lesser amount being deposited, the Tribunal was not prepared to exercise its discretion under section 113 and issue a suspension of determination.

In Strauss[13], an employee filed a complaint pursuant to section 74 of the Act based on the allegation that her employer, Strauss Herb Company, had failed to pay her annual vacation pay, statutory holiday pay and compensation for length of service.  The employee was ultimately successful and was awarded vacation pay, statutory holiday pay, and compensation for length of service.  Further, the employer was ordered to pay interest and three administrative penalties.  The company subsequently appealed on the basis that the Director failed to observe the principles of natural justice in making the determination and also requested that the Tribunal suspend the determination.  Contrary to the principles espoused in Miller[14], the applicant failed to provide an arguable case for the appeal on its merits, and instead relied on a bare allegation that the Director had failed to comply with the principles of natural justice in making its determination.  Moreover, the applicant did not provide any written submissions in support of its suspension request, nor deposit any amount with the Director.  Given that the applicant had the onus of establishing the basis for suspension, the Tribunal quite rightly refused suspension.  The Tribunal Member stated that “it is not for the Tribunal to divine the basis of an applicant’s suspension application.  The onus is clearly on the applicant to persuade the Tribunal on a balance of probabilities, the merits of its suspension request.”

The decision in Golden Crown[15], underscores the confusion that applicants, and their counsel, encounter when requesting a suspension of a Determination.  The applicant in this case had been ordered to pay a former employee $4,158.74, representing wages, annual vacation pay and interest.  Prior to submitting a suspension request, the applicant’s counsel had requested an explanation of the process governing the suspension of a determination.  An officer of the Tribunal responded to the applicant’s request and clarified the process.  The officer clearly laid out what was required if the applicant intended to proceed with the suspension request.  The applicant’s counsel was told the applicant was required to provide written submissions as to why the suspension should be granted.  As well, counsel for the applicant was informed that the applicant would be required to explain if any deposit would be offered to the Director in respect of the determination and if not, the reason why.  Despite receiving these instructions, the applicant failed to make any written submissions whatsoever.  The Tribunal Member found, in the circumstances, the applicant had abandoned the suspension request.  In any event, the Tribunal Member would have denied the applicant’s request for suspension as the applicant failed to discharge its burden that a suspension order was warranted in the circumstances.

In 0708964 B.C. Ltd. [16], the Tribunal considered a request to suspend a determination by an applicant that owned property on which a school was situated.  The applicant requested a suspension on the basis that the Director made an error in law and further that it would be required to sell the property in order the raise the necessary funds to post security.  While the Tribunal was not prepared to characterize the appeal as destined to fail, it did not accept the applicant’s argument that selling the land was the only practical option open to the applicant.  In addition, the Tribunal noted that the applicant was the only likely source of recovery of the complainants’ unpaid wages.  On this basis, the application to suspend the effect of the determination was refused.

Another Tribunal decision where suspension was refused occurred in Wren.[17]  The applicant applied for an order pursuant to section 113 of the Act suspending the effect of the determination pending the result of the appeal.  The applicant asserted a strong case on the merits and, accordingly, submitted that the determination should be suspended without him having to pay any funds, or alternatively, only a nominal sum.  The Tribunal briefly reviewed the merits of the appeal, as well as the financial circumstances of the applicant.  The Tribunal noted that the applicant had failed to provide any corroborating information about his financial circumstances.  The Tribunal also emphasized the fact that the applicant did not appear to have any close personal connections to the province of British Columbia apart from keeping a business office, that he “rarely visits”, in New Westminster.  The Tribunal thus concluded that a suspension order was not appropriate.

In the decision of Judy Harvey and Melvin Martin operating as The Sportsman Country Inn[18], the Tribunal refused the applicant’s suspension request.  At the time the Tribunal heard the suspension request, the Director had already taken steps to collect on the amount ordered to be paid under the determination.  In particular, the Director had issued a garnishment order on the applicant employer’s bank account.  The appeal hearing had been originally scheduled at an earlier date but was subsequently adjourned at the request of the employer.  At that time, no collection action had been commenced by the Director.  However, the Director stated that subsequently it had learned that the applicant was diverting funds into another company and that the applicant was actively trying to sell the operation.  In these circumstances, the Director felt justified in taking action on collecting on the determination.  The Tribunal noted that the employer did not respond to the submissions of the Director, nor did it offer any particulars to support the application apart from its claim that the garnishment created a financial hardship.   The Tribunal held that the applicant had not met its burden that the determination should be suspended.

In Pacific Western Costal Constructors Ltd.[19], the Tribunal considered a suspension request by the applicant employer who appealed a determination of the Director ordering it to pay $51,056.60, representing wages and accrued interest to 30 former employees.  The applicant was a subcontractor that had commenced proceedings in the British Columbia Supreme Court against the developer as the applicant alleged it was due unpaid amounts.  The applicant did not dispute that the employees were entitled to wages.  However, the applicant took the position that the disputed funds in respect of the Supreme Court action included the outstanding wages and that it was not in a position to deposit any funds with the Director.  The applicant had filed a lien against the property and the funds in dispute had been paid into the Supreme Court by the developer pending a trial.  The applicant submitted that the Director should attach the funds in Court to recover the outstanding wages instead of pursuing the applicant company.  The Director had already commenced collection procedures against the applicant, and submitted that an order to suspend the collection would unduly prejudice the collection of the unpaid wages.  The employees argued that the dispute between the applicant and the developer should not preclude them from seeking payment of their wages.

In denying the application to suspend the determination, the Tribunal was convinced that the appeal had no merit.  The Tribunal found that a dispute with a third party could not result in depriving the employees of their wages.  Further, the Tribunal emphasized the risk that the employees would never completely recover their wages given the fact that the employer had stated it had no funds to deposit pending the appeal of the determination.

In Lowan[20], the applicants appealed a determination issued by the Director ordering the applicants to pay their former employee the sum of $15,664.01 on account of unpaid wages and interest.  The applicants’ counsel requested that the determination be suspended without any deposit with the Director.  In response, the Director submitted that the determination should be suspended only if the applicants deposit the full amount required to be paid under the determination.  The applicants’ submission that a suspension order was warranted in the circumstances rested primarily on the fact that the applicants’ business was no longer operating and both applicants had limited liquid financial assets.  The Tribunal came to the conclusion that a suspension was not appropriate given the legitimate concern of whether the applicants would be able to pay the determination should it be confirmed on appeal.

C.        Reconsideration of Appeals

In The City of Surrey[21], the Tribunal Panel considered a suspension request from a determination, whereby the applicant municipality applied for a reconsideration of a decision issued by the Tribunal.  In this case, the City of Surrey (the “City”) had applied for a reconsideration of a determination that was confirmed on appeal requiring it to pay approximately $205,000 to the Director, to cover wages and other statutory entitlements to 32 persons receiving firefighting instruction.  In connection with its reconsideration application, the City applied under section 113 of the Act to have the Tribunal suspend the effect of the determination pending the outcome of the reconsideration proceedings.  The Director and the Surrey Firefighter’s Association both objected to the City’s section 113 application.

The City submitted in support of its suspension request that it did not wish to be in the position of having to recoup significant amounts of money from a number of individuals in the event that the reconsideration application was successful.  Moreover, the City confirmed that there was no issue in respect of its ability to pay.  In response, the Director submitted that a suspension request was not available pending a reconsideration application and, further, the Director maintained that the City had not followed through with an earlier promise to have funds paid to the Director.  The City responded that it was prepared to deposit the full amount with the Director in trust pending the outcome of the reconsideration provided the Director would not disburse the funds until after a decision was made.  The Tribunal first addressed the threshold question of whether it had the legal authority to suspend the effect of a determination pending a reconsideration decision.  The Tribunal held that the language, context and legislative intent of section 113 was that the power exercised by the Tribunal ought to be only exercised in the context of appellate proceedings over which it has exclusive jurisdiction.  The Tribunal then cited two earlier Tribunal decisions for the following proposition:

The language should not be read so as to permit the Tribunal to encroach on the role of      the courts or other adjudicative bodies merely because a person has appealed sometime in          the past: see Re New Pacific Limousine Service Inc.[22] and Re Paradon Computer Systems.[23]

The Tribunal rejected the Director’s narrow interpretation of the legislation whereby section 113 would only apply in the period between the determination and the original Tribunal appeal decision.  Instead, the Tribunal took a middle ground approach and interpreted the provision to read that a “person who appeals” a determination may make a section 113 request at any point while the statutory appeal process, including the reconsideration process, is ongoing.  The Tribunal felt the broad authority given to the Tribunal to suspend a determination under section 113 to ensure justice is done during an appeal supported this view.  According to the Tribunal, to exclude section 113 from the reconsideration process would prevent the Tribunal from ensuring that justice is done with respect to reconsiderations.

The Tribunal found the Director’s submissions to be more convincing with respect to discretion than that of jurisdiction.  The Tribunal identified two factors that become particularly important when a suspension request is made in the context of a reconsideration application.  First, the suspension request will generally occur prior to the Panel even making a decision on the preliminary issue of whether to even engage in the reconsideration process.  Second, the application will arise from a considered appeal decision by an Adjudicator.  In consideration of those factors, the Tribunal took the position that for the Tribunal to allow a suspension request in the context of a reconsideration application, an applicant must make a “clear and compelling” case to the Tribunal that it will suffer prejudice if a suspension order is denied.  As such, the party requesting a suspension should demonstrate to the Tribunal that it has contacted the Director in good faith, was not able to reach an agreement with respect to payment and disbursement pending the reconsideration, and that the Director’s stance pending the outcome of the reconsideration will cause them serious hardship.

Applying those principles to the case at bar, the Tribunal found that a mutually agreeable situation was available whereby the City would forward the funds to the Director on the condition they would not be paid until after the reconsideration decision was made.  It was not clear on the evidence, however, whether the City had actually forwarded the funds to the Director.  On this basis, the Tribunal encouraged the parties to resolve the disbursement issue.  In any event, the Tribunal was not prepared to suspend the determination pending the reconsideration process.  The Tribunal noted that it did not have sufficient evidence regarding the prejudice that the City would suffer if the money were paid out to the employees, nor did it have clear evidence that the Director was insisting on ordering the funds disbursed prior to the reconsideration decision.

In The City of New Westminster[24], the Tribunal considered a suspension request, in conjunction with an application for reconsideration brought by the City of New Westminster (the “City”).  The City applied for reconsideration of an Adjudicator’s decision confirming a determination finding that the City had breached the Act when it charged job applicants a $50 non-refundable fee as part of the application process.  In support of its suspension application, the City submitted that it had a meritorious appeal, that its conduct throughout the investigation process had been excellent, and that it was financially solvent.  Further, the City submitted that it would suffer prejudice because of the difficulty the City would face in recovering the amount ordered in the determination from the individuals in the event the Tribunal cancels or varies the determination.  In response, the Director raised a preliminary objection that a suspension pending a reconsideration decision was not contemplated by section 113 of the Act.  The Director also submitted that the matter was at a point at which the full amount of the determination should be deposited with the Director.  Finally, the Director submitted that at the reconsideration stage, the employer should interact directly with the Director, as a statutory fiduciary, responsible for enforcement under the Act, with respect to disbursement of funds collected.

The Tribunal dispensed with the preliminary objection that a suspension order was not available on a reconsideration application by following the identical analysis that the Tribunal undertook in The City of Surrey.[25] The Tribunal then considered the facts in the present case.  In dismissing the suspension application, the Tribunal found that the City had failed to raise any compelling reason as to why it had failed to offer to deposit the full amount with the Director.  Moreover, the Tribunal found that the City had failed to provide any basis for its submission that the Director had taken a position to the City’s prejudice with respect to the issue of disbursement during the reconsideration process.

D.        Suspension Orders Rendered Moot

In circumstances where the Tribunal releases a decision regarding a suspension request at the same time as issuing its decision on the merits of the appeal, the suspension order will be rendered moot.  This situation was illustrated by the Tribunal decision in More Group.[26] In that case, three related companies, More Marine Ltd., More Management Ltd., and Morecorp Holdings Ltd. (collectively,  the “More Group”), appealed a determination of the Director in the amount of $4,710.37.  The Tribunal’s decision specifically related to the unpaid wages of one of its former employees.  The More Group sought a suspension of the determination pending the appeal and advised the Tribunal that it was prepared to place the amounts ordered in the determination in the trust accounts of its legal counsel.  The Tribunal was convinced that the appeal had merit with respect to More Marine Ltd. and More Management Ltd.; however, because the Tribunal ordered that the determination be cancelled as against these two companies in the same decision, the suspension issue was rendered moot.  With respect to Morecorp Holdings Ltd., the Tribunal denied the application to suspend the determination as it was not persuaded that its appeal had any merit.


Upon reviewing a number of decisions on the suspension of a determination, it became apparent to the Author that applicants are often times confused by the process and do not adequately prepare for this application.  One plausible explanation is that applicants are primarily focus on the substantive aspects of the appeal to the detriment of the suspension application.  This may be exacerbated by the requirement set out in the Rules, whereby an applicant must file written submissions in respect of the application for suspension at the same time as filing the appeal or request for reconsideration.  No matter the reason, applicants are cautioned against taking a casual approach to these applications given that it is the applicant who bears the onus of satisfying the Tribunal that a suspension is warranted.

In many cases, applicants have relied on the strength of their appeal on its merits in support of their submission to post little or no money with the Director.  In the Author’s view, this reliance is misplaced.  In considering what terms and conditions should be placed on the suspension order, Tribunal Members place more weight on whether depositing money with the Director will have a prejudicial effect on the applicant.  Although the strength of an appeal on its merits is helpful in seeking a lesser amount to be deposited, especially if the lesser amount is supported by an applicant’s own calculations, the overriding factor that a Tribunal will consider in determining whether a lesser amount is justified is whether the applicant will be prejudiced.

Based on the decision in Tricom Services Inc.[27], applicants should be cautioned against claiming that they are able to pay the full amount under the determination, while also making a general assertion that they will be unduly financially prejudiced.  The Tribunal in that case highlighted this inconsistency and noted that without some “unique prejudice flowing from having to post the full amount of the Determination” it was of the view that a determination should only be suspended if the full amount of the determination is deposited with Director.

A number of common mistakes made by applicants have emerged in a number of Tribunal decisions.  Five common errors are set out below:

  • Failing to deposit the full amount that is required to be paid under the determination with the Director, or some lesser amount with the Director which the Tribunal would think adequate in the circumstances; [28]
  • Neglecting to provide written reasons for why a suspension of the determination should be ordered;[29]
  • Failing to provide corroborating  documents in support of a contention of undue financial hardship;[30]
  • A bare and unspecified claim that the Director failed to observe the principles of natural justice in reaching its determination; [31] and
  • Failing to set out the nature of the prejudice in requesting a suspension on the ground of prejudice.[32]

The following seven instructive principles for both applicants and adjudicators are set out as follows:

  • Adjudicators should review section 113 applications through a two-stage analysis[33]:

(1)        The Tribunal should determine whether it should suspend the determination.

(2)        If a suspension is warranted, the Tribunal should then consider what terms and conditions are suitable.

  • It is the applicant’s burden to show why a determination order should be suspended;[34]
  • If there is a risk that employees will not be able to fully recover what is owed to them, the Tribunal is unlikely to grant a suspension request made by an employer;[35]
  • A suspension of a non-monetary determination is permitted;[36]
  • A suspension will not be granted where it appears the company is trying to actively avoid collection actions;[37]
  • A Tribunal will view the adequacy of a proposed deposit not just from the perspective of the applicant employer, but also from the perspective of any employees whose rights may be affected by the granting of a suspension order;[38] and
  • For a Tribunal to award a suspension in conjunction with a reconsideration application, an applicant must demonstrate a “clear and compelling” case that it will suffer serious prejudice if a suspension order is not granted.[39]


The issuance or denial of a suspension may have serious financial consequences for both the applicant and respondent in a dispute.  The granting of a suspension is a discretionary remedy and applicants should not assume their request will be approved as a matter of course.  With careful planning, however, chances for a successful outcome are significantly increased.  Prior to initiating a request, an applicant must ensure compliance with the legislative framework and provide a detailed evidentiary record for all submissions.

[1] Tricom Services Inc., BC EST #D420/97

[2] Motion Works, BC EST #D345/946

[3] TNL Paving Ltd. et al., BC EST # D002/97

[4] Tricom Services Inc., supra

[5] Miller, BC EST # D090/10

[6] Miller, supra

[7] Kootenai Community Centre Society, BC EST # D001/12

[8] Wen-Di, BC EST # D307/99

[9] Chatzispiros, EST #D520/98

[10] Holt, BC EST #D123/06

[11] RTS, BC EST #D070/03

[12] Tricom Services Inc., supra

[13] Strauss, BC EST # D095/10

[14] Miller, supra

[15] Golden Crown, BC EST # D010/09

[16] 0708964 B.C. Ltd., BC EST # D126/10

[17] Wren, BC EST #D099/10

[18] Judy Harvey and Melvin Martin operating as The Sportsman Country Inn, BC EST #D411/00

[19] Pacific Western Coastal Constructors Ltd., BC EST D#074/08

[20] Lowan, BC EST D#254/00

[21] The City of Surrey, BC EST #D049/99

[22] Re New Pacific Limousine Service Inc., BC EST D#054/96

[23] Re Paradon Computer Systems, BC EST D#221/98

[24] The City of New Westminster, BC EST D#518/98

[25] The City of Surrey, supra

[26] More Group, BC EST #D078/08

[27] Tricom Services Inc., supra

[28] RTS, supra

[29] Strauss, supra

[30] 0708964 B.C. Ltd., supra

[31] Strauss, supra

[32] TNL Paving Ltd. et al,, supra

[33] Miller, supra

[34] Strauss, supra

[35] Pacific Western Coastal Constructors Ltd., supra

[36] TNL Paving Ltd. et al., supra

[37] Judy Harvey and Melvin Martin operating as The Sportsman Country Inn, supra

[38] Tricom Services Inc., supra

[39] The City of Surrey, supra

Tags: , ,

Posted by Shafik Bhalloo (posts) and Devin Lucas (posts) | Filed under Labour & Employment | ....
Shafik Bhalloo
Monday, January 7th, 2013    Posted by Shafik Bhalloo (posts)
Shafik Bhalloo
Shafik Bhalloo has been a partner of Kornfeld LLP since 2000. His practice is focused on labour and employment law, and on commercial and civil litigation. He is also an Adjudicator on the Employment Standards Tribunal and an Adjunct Professor in the Faculty of Business Administration at Simon Fraser University.

By Shafik Bhalloo

In a recent criminal decision, R. v. Cole[1], the Supreme Court of Canada provided much needed guidance on when an employee may reasonably expect  data stored on his work issued computer will be treated as private. In this case, a high school teacher, who also worked with the school’s IT department in supervising computer use by students and staff, had authority to remotely access the data stored on student computers connected to the school network and accessed a student’s email account. The teacher found nude photographs of another student and copied them onto the hard drive of his school-issued laptop. Under the school’s Acceptable Use Agreement (“UA”), the teacher was allowed to use his work-issued laptop for both work and personal purposes. When a technician employed by the school, while performing regular maintenance work on the teacher’s laptop, discovered a hidden folder on the teacher’s laptop containing the said photographs, he notified the school’s principal. Pursuant to the latter’s instructions, the technician copied the pictures to a compact disc. The principal, subsequently, seized the laptop and, thereafter, the technician copied, on a second compact disc, temporary internet files from the laptop. The laptop was then turned over to the police, together with the two discs. The police, without obtaining a search warrant in advance, examined the contents of the laptop and the two discs and created a mirror image of the laptop’s hard drive. The teacher was later charged with possession of child pornography.

At trial, the teacher applied and was successful under section 8 and subsection 24(2) of the Canadian Charter of Rights and Freedoms to have the evidence against him excluded on the basis that it was obtained in a manner violating his constitutional rights under the Charter. On appeal by the Crown, the Ontario High Court of Justice reversed the lower court’s decision, finding that the trial judge erred in law in concluding that Mr. Cole had an objectively reasonable subjective expectation of privacy stating that the judge erroneously ignored the following contextual factors:

  • The teacher’s acceptance of the employer’s UA as terms of his employment, which afforded him knowledge that the data and information on the computer and drives assigned to him by the employer were not private;
  • The teacher also worked with the school’s IT department staff to supervise and monitor both the computer use by students and staff of the high school and the overall integrity of the school’s network, and, in this supervisory capacity, the teacher had domain-wide privileges which demonstrated to him that the data on his computer drives was accessible by employer representatives such as himself;
  • In light of the first two points above, indicators such as the teacher’s password and his exclusive possession of the laptop as part of his employment were not privacy indicators;
  • The teacher’s knowledge that the hardware and software in and connected to the laptop belonged to the employer.

On appeal by the teacher, the Court of Appeal of Ontario set aside the latter decision in part holding that the disc containing the temporary internet files, the laptop and the mirror image of its hard drive should be excluded. The Court of Appeal reasoned as follows:

[76] … the fact that the discs and laptop in this case had been lawfully seized by the principal and the school board and delivered to the police does not affect the continuing privacy expectations of the appellant. Police are not relieved from the stringent standard of obtaining judicial authorization to conduct a search or seizure based on reasonable and probable grounds, simply because they are provided with evidence in circumstances where the accused’s Charter rights were either not engaged or were not infringed in the initial gathering of that evidence….

[77] …The appellant’s privacy interest with respect to his laptop continued throughout its transfer to police, notwithstanding that it was the property of the school board, and already lawfully seized by them. Personal information was also stored on the laptop.

The police conducted a search and seizure of the laptop and seized the mirror image of the hard drive, capturing every piece of personal information the appellant may have stored on it, including the photographs of his wife, without a warrant.

[78] The appellant also had a privacy interest in his personal internet browsing history and what it revealed about his personal predilections and choices. In R. v. Morelli, 2010 SCC 8 (CanLII), [2010] 1 S.C.R. 253, at para. 3, the Supreme Court referred to this as ‘the electronic roadmap of your cybernetic peregrinations, where you have been and what you appear to have seen on the Internet’. Because the appellant had a continuing privacy interest in this information, the transfer of the disc with the temporary internet files to the police was a ‘seizure’ within the meaning of s. 8 of the Charter.

[79] The police search of the laptop and the disc with the temporary internet files is therefore prima facie unreasonable. The onus shifts to the Crown to establish that this warrantless search by police was nonetheless reasonable. There were no exigent circumstances. Both the school environment and the evidence were secure; the teacher was suspended and the police were in possession of the discs and the laptop. The school board had no authority to consent to the search. This warrantless search was not reasonable. Therefore, the police violated the appellant’s s. 8 rights when they searched the laptop and the disc with the temporary internet files.

However, the Court of Appeal viewed the disc containing images of the student differently, stating:

Given that the photographs were taken from the school’s network, using the school’s computer and were the subject of the privacy interest of a student, the appellant had no personal privacy interest in the data. The photographs were found by the technician in plain view, while engaged in permissible access. They were lawfully seized by the principal and transferred to police. As the functional equivalent of photographs in an envelope, the police did not need to conduct a further search of this evidence. Because the appellant had no privacy interest in the photographs themselves (as opposed to the presence of those photographs in the laptop), the delivery of the disc to police was not a seizure.

On Appeal by the Crown, the Supreme Court of Canada, while agreeing with the Court of Appeal that the teacher had a reasonable expectation of privacy in the circumstances and the police infringed the teacher’s privacy protected under section 8 of the Charter, allowed the appeal and set aside the decision of the Court of Appeal. In arriving at this conclusion, Mr. Justice Fish, writing for the majority of the Supreme Court, delineated the following instructive principles:

  • Whether at home or in the workplace, computers are reasonably used for personal purpose and contain information that is meaningful, intimate and touching on the user’s biographical core;
  • The user may reasonably expect privacy in the information contained on their computer particularly where personal use is permitted or reasonably expected;
  • While ownership of the computer and workplace policies are relevant considerations, neither is determinative of a person’s reasonable expectation of privacy;
  • The totality of all the circumstances will need to be considered to determine whether privacy is a reasonable expectation in any particular case;
  • Workplace policies and practices may diminish an individual’s expectation of privacy in a work computer; however they may not in themselves remove the expectation entirely;
  • A reasonable, though diminished expectation of privacy, is nonetheless a reasonable expectation of privacy, protected by s. 8 of the Charter and subject only to state intrusion under the authority of a reasonable law.

Applying the above principles to the facts in this case, Fish J. stated the operational realities of the teacher’s workplace consisted of factors that pulled in competing directions. In particular, Fish J. noted that while the written policy, and actual practice at work, permitted the teacher to use his work-issued laptop for personal purpose, the policy and technological reality deprived him of exclusive control and access to the personal information he recorded on the laptop. More particularly, Fish J. noted that the written policy of the school, of which the teacher was reminded by the principal annually, provided that the data and messages generated on or handled by the employer’s equipment was owned by the employer and he was aware that the contents of his hard drive were available to all other users and technicians with domain administration right. On the totality of the circumstances, Fish J. concluded that the teacher had a reasonable subjective expectation of privacy in his internet browsing history and the informational content of his work-issued laptop; it contained information that was meaningful, intimate and touching on his biographical core.

Having said this, however, the Supreme Court did not find the school to have acted unreasonably or in breach of s. 8 of the Charter when its technician inspected the teacher’s laptop in context of routine inspection or when the school subsequently seized the laptop at the instruction of the principal because the school’s principal had a statutory duty to maintain a safe school environment. However, the school’s lawful authority did not afford the police lawful authority to conduct a warrantless search and seizure of the computer material and examine its contents, according to the Supreme Court. In particular, Fish J. reasoned:

[67] In taking possession of the computer material and examining its contents, the police acted independently of the school board (R. v. Colarusso, 1994 CanLII 134 (SCC), [1994] 1 S.C.R. 20, at pp. 58-60). The fact that the school board had acquired lawful possession of the laptop for its own administrative purposes did not vest in the police a delegated or derivative power to appropriate and search the computer for the purposes of a criminal investigation.

[73] The school board was, of course, legally entitled to inform the police of its discovery of contraband on the laptop. This would doubtless have permitted the police to obtain a warrant to search the computer for the contraband. But receipt of the computer from the school board did not afford the police warrantless access to the personal information contained within it. This information remained subject, at all relevant times, to Mr. Cole’s reasonable and subsisting expectation of privacy.

Having found that the police breached the teacher’s privacy rights under section 8 of the Charter, Fish J. embarked on an inquiry under s. 24(2) of the Charter, namely, whether the unconstitutionally-obtained evidence by the police should be excluded. Here, Fish J. considered a three-part balancing test set out in the Supreme Court’s decision in R. v. Grant[2]. In particular, Fish J. considered (i) the seriousness of the Charter-infringing conduct of the police; (ii) the impact of the breach on the Charter-protected interest of the teacher; and (iii) the society’s interest in the adjudication of the case on its merits. In setting aside the decision of the Court of Appeal and allowing the unconstitutionally-obtained evidence, Fish J. stated with respect to the first part of the Grant test:

[84] Regarding the seriousness of the Charter-infringing conduct, the courts below focused on the actions of Detective Constable Timothy Burtt, the officer who took possession of the computer material, who searched the discs, and who sent the laptop away for forensic examination. The trial judge concluded that this officer’s actions were ‘egregious’ (para. 26), and the Court of Appeal considered his conduct serious enough to favour exclusion.

[85] I am unable to share either conclusion.

[86] The police officer did not knowingly or deliberately disregard the warrant requirement. As events were unfolding in this case, the law governing privacy expectations in work computers was still unsettled. Without the guidance of appellate case law, D.C. Burtt believed, erroneously but understandably, that he had the power to search without a warrant.

[87] He did not act negligently or in bad faith. Nor does his conduct evidence insensitivity to Charter values, or an unacceptable ignorance of Mr. Cole’s rights under the Charter. The officer did not rely exclusively, as the courts below suggested, on his mistaken belief that the ownership of the laptop was necessarily determinative. While this was an important factor underlying his decision not to obtain a search warrant, the officer also turned his mind to whether Mr. Cole had an expectation of privacy in the laptop (p. 130). He was alert to the possibility that the hard drive contained private or privileged material (pp. 130-31 and 164). And he testified that he intended to respect Mr. Cole’s privacy interest in this regard (p. 131).

[89] …Where a police officer could have acted constitutionally but did not, this might indicate that the officer adopted a casual attitude toward — or, still worse, deliberately flouted — the individual’s Charter rights (Buhay, at paras. 63-64). But that is not this case: The officer, as mentioned earlier, appears to have sincerely, though erroneously, considered Mr. Cole’s Charter interests.

[90] Accordingly, in my view, the trial judge’s finding of ‘egregious’ conduct was tainted by clear and determinative error (Côté, at para. 51). On the undisputed evidence, the conduct of the officer was simply not an egregious breach of the Charter. As earlier seen, the officer did attach great importance to the school board’s ownership of the laptop, but not to the exclusion of other considerations. He did not ‘confuse ownership of hardware with privacy in the contents of software’ (trial reasons, para. 29).

With respect to the second part of the Grant test, Fish J. stated:

[91] Turning then to the impact of the breach on Mr. Cole’s Charter-protected interests, the question relates to ‘the extent to which the breach actually undermined the interests protected by the right infringed’ (Grant, at para. 76). In the context of a s. 8 breach, as here, the focus is on the magnitude or intensity of the individual’s reasonable expectation of privacy, and on whether the search demeaned his or her dignity (R. v. Belnavis, 1997 CanLII 320 (SCC), [1997] 3 S.C.R. 341, at para. 40; Grant, at para. 78).

[92] In his s. 24(2)analysis, the trial judge neglected entirely to consider the diminished nature of Mr. Cole’s reasonable expectation of privacy. Likewise, the Court of Appeal overlooked the fact that the operational realities of Mr. Cole’s workplace attenuated the effect of the breach on his Charter-protected interests.

[93] Moreover, the courts below failed to consider the impact of the ‘discoverability’ of the computer evidence on the second Grant inquiry. As earlier noted, the officer had reasonable and probable grounds to obtain a warrant. Had he complied with the applicable constitutional requirements, the evidence would necessarily have been discovered. This further attenuated the impact of the breach on Mr. Cole’s Charter-protected interests (Côté, at para. 72).

Finally, with respect to the third part of the Grant test, Fish J. stated:

Finally, I turn to the third Grant inquiry: society’s interest in an adjudication on the merits. The question is ‘whether the truth-seeking function of the criminal trial process would be better served by admission of the evidence, or by its exclusion’ (Grant, at para. 79).

[95] Not unlike the the considerations under the first and second inquiries, the considerations under this third inquiry must not be permitted to overwhelm the s. 24(2) analysis (Côté, at para. 48; R. v. Harrison, 2009 SCC 34 (CanLII), 2009 SCC 34, [2009] 2 S.C.R. 494, at para. 40). They are nonetheless entitled to appropriate weight and, in the circumstances of this case, they clearly weigh against exclusion of the evidence.

[96] The laptop, the mirror image of its hard drive, and the disc containing Mr. Cole’s temporary Internet files are all highly reliable and probative physical evidence. And while excluding it would not “gut” the prosecution entirely, I accept the Crown’s submission that the forensic examination of the laptop, at least, is “critical”: the metadata on the laptop may allow the Crown to establish, for example, when the photographs were downloaded and whether they have ever been accessed.

[97] In sum, the admission of the evidence would not bring the administration of justice into disrepute. The breach was not high on the scale of seriousness, and its impact was attenuated by both the diminished privacy interest and the discoverability of the evidence. The exclusion of the material would, however, have a marked negative impact on the truth-seeking function of the criminal trial process.

For the above reasons, Fish J. did not exclude the evidence unlawfully obtained by the police.

While the case is a criminal one and engages an individual’s privacy rights under s. 8 of the Charter since it involves state (police) intrusion of an individual’s privacy rights, the privacy principles articulated by Fish J. will undoubtedly be considered by courts in future employment law cases and employers should be mindful of those principles in structuring their relationship with their employees.

It is recommended that employers should implement clear policies that define, in unequivocal terms, the employer’s expectations surrounding workplace computer use, including smartphone use, if employers provide such equipment to employees in an employment context. Although Fish J., in R. v. Cole, stated that workplace policies are not determinative of a person’s reasonable expectation of privacy, if properly drafted a workplace policy combined with consistent employer actions in the workplace, may diminish, objectively, the employee’s reasonable expectation of privacy. For example, where both the employer’s workplace policy and the employer’s actions in the workplace are consistent in prohibiting any personal use by employees of employer-issued computers or smartphones and where the employee has acknowledge receipt of employer’s policy that provides that any data sent, stored or received using the employer’s computer or smartphone is the property of the employer and the employer reserves the right to perform random checks or audits of the employee’s computer or smartphone use, the employee may be hard pressed to argue that he or she has a reasonable expectation of privacy.

[1] 2012 SCC 53

[2] 2009 SCC 32

Tags: , , , , , , , ,

Posted by Shafik Bhalloo (posts) | Filed under Labour & Employment | ....
Shafik Bhalloo
Tuesday, October 23rd, 2012    Posted by Shafik Bhalloo (posts)
Shafik Bhalloo
Shafik Bhalloo has been a partner of Kornfeld LLP since 2000. His practice is focused on labour and employment law, and on commercial and civil litigation. He is also an Adjudicator on the Employment Standards Tribunal and an Adjunct Professor in the Faculty of Business Administration at Simon Fraser University.

 By Devin Lucas and Shafik Bhalloo

In Globex Foreign Exchange Corporation v. Kelcher[1], three employees, David Kelcher, Mark MacLean, and Luciano Oliverio entered into employment contracts with Globex Foreign Exchange Corporation, a business engaged in foreign currency exchange. In 2003, each employee signed a non-competition and non-solicitation agreement comprising restrictive covenants.  MacLean agreed to the restrictions as part of his initial employment. Both Kelcher and Oliverio agreed to the restrictions during their employment, but did not receive any additional benefits as a result. In March 2005, the three employees were asked to sign more burdensome non-competition and non-solicitation restrictive covenants.  Objecting to these new restrictive covenants, Kelcher resigned and MacLean was fired.  Oliverio signed the new agreement, but resigned shortly thereafter. All three employees joined a rival firm.  In April 2005, Globex filed suit, claiming damages from loss of clients.

The Alberta Court of Queen’s Bench ruled against Globex and held that MacLean had been wrongfully dimissed and was therefore relieved of the restrictive covenants he had consented to.  Further, the Court found that the restrictive covenants were unenforceable as against Kelcher and Oliverio for want of consideration, as the agreements were signed by both employees during the course of their employment, but had received nothing in return.  The Court found that consideration could be present in instances where there is mutual understanding between employer and employee that the employer will not exercise its right to lawfully terminate the employment if the employee agrees to the restrictive covenant; however, the Court found that such mutual understanding did not exist in this case. If such consideration had been present, the Court held that only Kelcher’s non-solicitation clause would have been enforceable because Oliverio’s non-solicitation clause was overly broad and thus unenforceable.

Globex appealed the decision to the Alberta Court of Appeal.  Madam Justice Hunt, writing for the majority, dismissed Globex’s appeal. In so holding, Madam Justice Hunt affirmed the trial court’s ruling that the wrongful dismissal of an employee will render that employee’s restrictive covenants unenforceable. 

Madam Justice Hunt provided a number of legitimate reasons for this longstanding principle of employment law.  The Court said:

Most particularly, to hold otherwise would reward employers for mistreating their employees. For example, an employer could hire a potential competitor, impose a restrictive covenant on the employee, then wrongfully dismiss her a short time later and take advantage of the restrictive covenant. This would be a highly effective, but manifestly unfair, way of reducing competition. A second justification (alluded to by Simon Brown L.J. in Rock Refrigeration) may be that enforcing a restrictive covenant in the face of wrongful termination prima facie negates the consideration (whether continued employment or something else) given by the employer to the employee when she accepted the restrictive covenant.

Madam Justice Hunt also affirmed the trial court’s conclusion that some fresh consideration must be provided by the employer when employees accept restrictive covenants during their employment.

In order for an employer to validly enforce a restrictive covenant against a departing employee, the Alberta Court of Appeal held that three criteria would have to be met.  First, the restrictive covenant has to be reasonable with respect to the geographic scope, length of time and the activity that is restricted.  Second, an employee must be dismissed either with cause or notice or, alternatively, the employee must have resigned. Third, if the employer imposes a more stringent restrictive covenant during the course of employment, the employer must provide fresh consideration such as a raise or bonus. Alternatively, there must be some understanding that the employment would continue as a result of the employee agreeing to the addition or amendment of the restrictive covenant.

This case provides a useful guide with respect to the factors a court will look at when determining the enforceability of restrictive covenants in employment agreements.

[1] 2011 ABCA 240

Tags: , , , ,

Posted by Shafik Bhalloo (posts) | Filed under Corporate Governance, Labour & Employment | ....
Shafik Bhalloo
Wednesday, September 19th, 2012    Posted by Shafik Bhalloo (posts)
Shafik Bhalloo
Shafik Bhalloo has been a partner of Kornfeld LLP since 2000. His practice is focused on labour and employment law, and on commercial and civil litigation. He is also an Adjudicator on the Employment Standards Tribunal and an Adjunct Professor in the Faculty of Business Administration at Simon Fraser University.


When a manager is not a manager: Employers beware of liability for overtime or extra pay

                                                                        By Shafik Bhalloo*


Section of the British Columbia Employment Standards Act (the “Act”) delineates overtime wage requirements for employees who work over 8 hours per day or 40 hours per week.  It states:

40. (1) An employer must pay an employee who works over 8 hours a day, and is not working under an averaging agreement under section 37,

(a) 1 1/2 times the employee’s regular wage for the time over 8 hours, and

(b) double the employee’s regular wage for any time over 12 hours.

(2) An employer must pay an employee who works over 40 hours a week, and is not working under an averaging agreement under section 37, 1 1/2 times the employee’s regular wage for the time over 40 hours.

(3) For the purpose of calculating weekly overtime under subsection (2), only the first 8 hours worked by an employee in each day are counted, no matter how long the employee works on any day of the week.

However, section 40 of Act does not apply to employees who are “managers” as Section 34(f) of the Employment Standards Regulation (the “Regulation”) specifically excludes managers (and some other categories of employees) from hours of work and overtime requirements.  It states:


34. Part 4 of the Act does not apply to any of the following:

(f) a manager;

Having said this, simply calling an employee a “manager” will not exempt her from overtime compensation under Section 40 of the Act.  It is not the job title but the job duties that determine whether or not the employee is exempt from overtime compensation under the Act.  Section 1(1) of the Regulation provides an exclusive definition of  “manager” as follows:

1. (1) “manager” means

(a) a person whose principal employment responsibilities consist of supervising or directing, or both supervising and directing, human or other resources, or

(b) a person employed in an executive capacity;

In 429485 B.C. Limited Operating Amelia Street Bistro (“Amelia Street Bistro”)[1] the Employment Standards Tribunal considered several previous cases of the Tribunal on the definition of “manager” and concluded as follows:

The task of determining if a person is a manager must address the definition of manager in the Regulation….Typically, a manager has a power of independent action, autonomy and discretion; he or she has the authority to make final decisions, not simply recommendations, relating to supervising and directing employees or to the conduct of the business.  Making final judgments about such matters as hiring, firing, disciplining, authorizing overtime, time off or leaves of absence, calling employees in to work or laying them off, altering work processes, establishing or altering work schedules and training employees is typical of the responsibility and discretion accorded a manager.  We do not say that the employee must have a responsibility and discretion about all of these matters.  It is a question of degree, keeping in mind the object is to reach a conclusion about whether the employee has and is exercising a power and authority typical of a manager.  It is not sufficient simply to say a person has that authority.  It must be shown to have been exercised by that person.

If you are an employee hired in a “managerial” or “executive” position, you should examine your day-to-day duties and determine whether your primary job duties are supervisory or managerial  in character – do you have authority to make final decisions?  Do you supervise and direct employees?  Do you hire and fire employees?  Do you discipline employees?  Do you have discretion and authority to independently set or change employees’ schedules and make decisions to call in or layoff employees?  If your primary job duties includes some or most of these tasks, you may be a manager but if your primary duties do not include these tasks or if you rarely or irregularly perform these tasks, you may not be a manager within the meaning of the Regulation.  In such case, you may be entitled to overtime pay for any extra hours you work over and above 8 in a day and 40 in a week.

If, however, you satisfy the definition of “manager” in the Regulation, is your employer exempt from paying you any additonal pay for extra hours worked?  The Tribunal, in a few cases, has indicated that some managers can claim pay at “straight time” rates for extra hours worked[2] – that is, beyond 8 hours daily or beyond 40 hours weekly, if working those extra hours was not an agreed term of your employment relationship or included in your base pay.

If you are an employer desiring to curtail your exposure to pay extra to your manager for any additional hours of work, then you should consider have a binding employment contract in place that specifically addresses this issue.  More particularly, you want an employment contract that clearly specifies that the manager is expected to work in excess of 8 hours in a day and 40 hours in a week and that the manager’s base salary includes or is intended as compensation for all hours worked.

[1] BC EST #D479/97

[2] Re Fort St. John, BC EST # D265/03

Tags: , , , , , , ,

Posted by Shafik Bhalloo (posts) | Filed under Labour & Employment, Other | ....
Shafik Bhalloo
Monday, September 10th, 2012    Posted by Shafik Bhalloo (posts)
Shafik Bhalloo
Shafik Bhalloo has been a partner of Kornfeld LLP since 2000. His practice is focused on labour and employment law, and on commercial and civil litigation. He is also an Adjudicator on the Employment Standards Tribunal and an Adjunct Professor in the Faculty of Business Administration at Simon Fraser University.


By Shafik Bhalloo*

Like the mythical sasquatch, the Loch Ness monster, or the abominable snowman, most of us have heard of it and some of us have read about it, but never have we seen the remedy of reinstatement in section 79(2)(b) of the Employment Standards Act (the “Act”) actually occur.

Section 79(2)(b) provides:


(2) In addition to subsection (1), if satisfied that an employer has contravened a requirement of section 8 or 83 or Part 6, the director may require the employer to do one or more of the following:

(b) reinstate a person in employment and pay the person any wages lost because of the contravention

Colloquially described as a “make whole” remedy, section 79(2)(b) gives the Director of Employment Standards (the “Director”) the discretion to order an employer to reinstate an employee and pay he or she any lost wages, if the employer has contravened one or more of sections 8 (employment-related misrepresentations to the employee), 83 (termination of employment in retaliation for an employee’s enforcement or an inquiry as to his rights under the Act), or Part 6 of the Act (refusal to allow an employee to return to work following a statutorily mandated pregnancy leave[1], parental leave, family responsibility leave, compassionate care leave, reservists’ leave,  bereavement leave or jury duty).

 While reinstatement is not a remedy that is ordinarily available at common law, it is more commonly sought and awarded in a union context, where an employee grieves an unjust dismissal. This remedy, undoubtedly a powerful one if awarded, enables the employee to make up not only their past wage loss and to continue to receive the economic benefits of their employment in the future, but also restores any psychological benefits they derive from their job.  Therefore, the transference of the remedy of reinstatement from the union experience to the non-union sector in British Columbia, in the form of a statutory remedy under section 79(2)(b) of the Act, at first glance should be a welcome option for employees in the non-union sector as providing a comparable remedy to reinstatement available to their counterparts in the union sector.

However, in practice, in British Columbia, the statutory remedy of reinstatement has yet to make an appearance in an award by the Director or the Employment Standards Tribunal (the “Tribunal”), although dismissed employees have sought it in several cases. Partly, the absence of this remedy may be attributed to the limited circumstances in which it may be available or can be sought in the non-union sector in British Columbia, namely, it may only arise if the Director is satisfied that one or more of sections 8, 83 and Part 6 of the Act[2] were breached (limitations that do not exist in the union sector). It may also be that in some cases it is impossible or impractical to order reinstatement of the wrongfully discharged employee who otherwise satisfies one or more pre-requisites of the reinstatement remedy in section 79(2)(b) of the Act. Examples of this would include circumstances where the employer ceases operations[3] or the employee has secured alternate employment[4] after filing a complaint or left B.C., and not expressed any interest in being reinstated to their former position[5].

In such cases, there is an alternative “make whole” remedy that can be found under section 79(2)(c) of the Act, i.e. to pay a person compensation instead of reinstating the person’s employmentwhich the Director has been relatively more willing to award.  The Tribunal in Afaga Beauty Service Ltd.[6] delineated a list of non exclusive factors in determining appropriate compensation for loss of employment which included: “length of service with the employer, the time needed to find alternative employment, mitigation, other earnings during the unemployment, projected earnings from previous employment and the like.” While clearly not as extensive and as fulsome a remedy as reinstatement under section 79(2)(b) of the Act, the remedy under section 79(2)(c) seeks, as far as is economically possible, to return the employee to the position he or she would have been in had the employer’s misconduct not occurred. As described by the tribunal in Photogenis Digital Imaging Ltd./PDI Internet Café Incorporated[7], the compensation awarded under this section  “must be commensurate, in an economic sense, with reinstatement”.

Having said this, in my view, the apparent reticence of the Director in declining to grant the remedy of reinstatement cannot be fully attributed to the rationale offered earlier or the existence of the alternative to the remedy of reinstatement available in section 79(2)(c). If one refers to the Director’s online Interpretation Guidlines Manual (the “Guidlines”) for the Act, published on the website of the Employment Standards Branch[8], the following explanation in relation to the reinstatement remedy in section 79(2)(b) is offered:

Reinstatement is rarely appropriate as the relationship is usually too damaged for reinstatement to be successful. Therefore, to create a “make whole” solution to a contravention of these provisions, the director considers the following

  • wages lost; which may include wages from previous employer or due to missing another employment opportunity
  • recovery of reasonable out-of-pocket expenses caused by the contravention and the search for employment. Out-of-pocket expenses does not include the cost of obtaining legal advice, or of retaining legal counsel.

It would appear that the Director has a somewhat somber perspective on the reinstatement remedy in the Guidelines that favours the alternative in section 79(2)(c)-lost wages sans reinstatement. Admittedly, it is hard to refute that in most, if not all cases, where an employer has dismissed an employee the relationship between the parties is, at some level, bruised or fractured and there is undoubtedly a loss of trust and confidence between the parties and reluctance, whether large or small, by the employer to take the employee back even where a determination has been made that the employee was dismissed under harsh, unjust or unreasonable circumstances, contrary to one or more of sections 8, 83 or Part 6 of the Act.

In the cases considered in preparing for this article, it was difficult to find any one case that stood out as a clear example of a “relationship… too damaged for reinstatement” in contradistinction to the “ordinary” case of a bruised relationship between an employee and their employer who terminated their employment in contravention of the Act.  In a few cases the Tribunal delineated the Director’s reasons for the determination in greater detail offering more insight into why the Director decided against reinstatement such as in Photogenis Digital Imaging Ltd./PDI Internet Café Incorporated[9] where the Tribunal pointed out that the principal of the employer was “angry” or “accusatory” towards the two employees who filed complaints against the employer and berated one of them before terminating the employment of both as a retaliatory measure. However in most other cases the Tribunal simply reports, with little or no explanation, that the Director concluded the “relationship had broken down”[10] or the “employer did not want the employee”[11] or “reinstatement of the employee was not appropriate in this case”[12], and in two cases stating that the Director could have made the employee whole by way of a reinstatement order coupled with an order to recover lost wages[13] but instead ordered compensation in lieu of reinstatement. The lack of sufficient explanation why the reinstatement remedy was not awarded in most cases may very well be because the Tribunal did not find any real analysis or explanation for why the Director opted against the reinstatement remedy in the reasons for the determinations under appeal.

In the writer’s view, to deny the reinstatement remedy (where the employee wants it and has otherwise met the requirements of section 79(2)(b)) only because the employer is reluctant to take back the employee, or does not want the employee, or because there are some bruised feelings between the parties will only serve to reinforce the conclusion that the reinstatement remedy is a fiction and detract from any deterrent value the remedy may have with employers, who otherwise might be inclined to dismiss employees in contravention of the Act (particularly in circumstances contemplated in section 79(2)(b)). Surely the legislators in enacting this very powerful remedy must have envisaged that it would have “teeth.”

Having said this, it would be irresponsible to end this paper without mentioning two empirical studies by academicians on how the remedy of reinstatement has fared in the non-union sector. While not suggesting by any means that either of the studies, methodologically or otherwise, should be uncritically accepted, the findings in both are interesting and contribute to one’s understanding of what could make reinstatement, in the non-union sector, a more attractive remedy. The first is a study of the post-reinstatement experience of non-union federal workers in Quebec conducted in circa 1991 by Professor Trudeau[14] of the Faculty of Law at the Université de Montréal. In his study, Professor Trudeau reported that a survey of non-union employees reinstated under the federal Canada Labour Code (the “Code”) revealed that only 54 percent of the employees returned to work; 67 percent of those believed they were “unjustly” treated by their employer after returning to work; and approximately 38 percent had thereafter resigned from their employment at the time of the study. Professor Trudeau hypothesized that the apparent ineffectiveness of the reinstatement remedy in the non-union sector was due to the lack of union presence to monitor and oversee the employer’s conduct and protect the reinstated employee from harassment and discrimination.

Professor Eden[15] of the School of Public Administration at the University of Victoria conducted a subsequent empirical study to assess the effectiveness of reinstatement of non-union employees under the Code from the perspective of the employer. In her study, written questionnaires were sent to employers whose cases had been decided by an adjudicator under the Code and reinstatement was ordered.  Out of 106 awards between January 1, 1983 and December 31, 1991, she received responses from 37 employers (or about 35 percent). She summarized the responses of the employers as follows:

In summary, out of 37 employer respondents, just over one-half indicated that complainants either did not return to work (12 respondents) or were reemployed for less than three months (7).

Of those who returned to work (25), 14 respondents rated reinstatement unsuccessful. Only seven evaluated as successful. Thus, overall, the remedy of reinstatement appears to have been effective in only 30 percent of the cases.

Professor Eden concluded that her study supported Professor Trudeau’s conclusion that the remedy of reinstatement “has not fulfilled its promise in the non-union sector.” She also concludes, “(t)he presence of a union may be a key variable in the effectiveness of reinstatement as a remedy.”

If, in British Columbia, the Director at all shares the concerns articulated in the conclusions of Professors Trudeau and Eden, and if those concerns are factors influencing him from refraining from employing the reinstatement remedy in section 79(2)(b), then perhaps a statutory presumption in favour of reinstatement in the Act, combined with an enforcement or monitoring mechanism may serve as an equalizer or substitute for the missing watchful eyes of a union in the non-union sector. In this regard, the constructive comments of Professor Eden below are apt and I would argue her recommendations equally apply in context of the reinstatement remedy in the Act:

In the absence of a union, workers ordered reinstated to the workplace would have to be provided with greater support. To some degree, this may be achieved through a follow-up mechanism directed by the governmental agency that administers the statute. For example, the same inspector who tried to resolve the dispute between the parties prior to adjudication could contact the complainant after issuance of the adjudicator’s order to ensure employer compliance with the reinstatement order. Failure to comply on the part of the employer would result in this agency, not the complainant, initiating the procedure for enforcing the remedy…

Having an enforcement mechanism such as that suggested by Professor Eden to monitor and oversee the compliance of the reinstatement remedy after it is given will only add to its effectiveness as a remedy and perhaps bring it out of obscurity in British Columbia in the non-union sector.

[1] In the case of pregnancy and other leaves permitted under Part 6 of the Act, section 54 of the Act additionally imposes on the employer specific duties not to terminate the employee’s employment and to return her to her position at the end of the leave:

54. (1) An employer must give an employee who requests leave under this Part the leave to which the employee is entitled.

      (2) An employer must not, because of an employee’s pregnancy or a leave allowed by this Part,

(a) terminate employment, or

(b) change a condition of employment without the employee’s written consent.

       (3) As soon as the leave ends, the employer must place the employee

(a) in the position the employee held before taking leave under this Part, or

(b) in a comparable position.


[2] Re Irina Berezoutskaia, BC EST #D082/08; Jim Pattison Chev-old, A division of Jim Pattison Industries Ltd., BC EST #D643/01; Re Allan Pope, BC EST #D007/05

[3] Wang Wei-Ming also known as Wendy Wang carrying on business as Ming Spa, BC EST #D012/11

[4] VCS Hytek Air-Conditioning Inc., BC EST #D201/98; The Cash Store Inc., BC EST #D087/09

[5] Afaga Beauty Service Ltd., BC EST #D318/97

[6] Ibid.,, p. 5; W.G. McMahon Canada Ltd., BC EST #D386/99

[7] BC EST #D534/02



[9] Supra, footnote 7, p. 7.

[10] Quigg Development Corporation, BC EST #RD047/08 Reconsideration of BC EST #D014/08; Rose Miller, Notary Public, BC EST #D062/07

[11] In The Cash Store Inc.[11], supra, footnote 4, it is noteworthy that the Tribunal, in upholding the lost wage award of the Director made to the employee whose employment was terminated for requesting a family responsibility leave pursuant to section 52 of the Act, observed that the Director dismissed reinstatement as a viable remedy not simply because the employee had secured an alternative employment but also because the employer “did not want her back”.

[12] Skyline Estates Ltd. doing business as “Traveller’s Inn”, BC EST #D210/03;  Maltesen Masonry Ltd., BC EST #D070/10

[13] Rite Style Manufacturing Ltd. and M.D.F. Doors Ltd., BC EST #D105/05; Orr Hotel limited and Golden Tree Lumber Inc, Associated Companies pursuant to Section 95 of the Employment Standards Act, operating as Dominion Hotel and Lamplighter Pub, BC EST #D094/01

[14] G. Trudeau, “Is Reinstatement a Suitable Remedy to At-Will Employees?” (1991), 30 Ind. Re. 302

[15] G. Eden, Reinstatement in the Nonunion Sector: An empirical Analysis” (1994), 49 Ind. Re. 87

Tags: , , , , , ,

Posted by Shafik Bhalloo (posts) | Filed under Labour & Employment, Other | ....