Law Times

Law Times • apriL 9, 2018 Page 7 www.lawtimesnews.com Working from home an essential term in contract BY NIKOLAY Y. CHSHERBININ T here is a remarkable range of dif- ferences in employers' conduct that has been found to amount to constructive dismissal. In most constructive dismissals, the operative question is whether the unilateral change introduced by the employer to a signifi- cant term of the employment contract amounted to its repudiation. A good ex- ample is a recent employment case, Hag- holm v. Coreio Inc., 2017 ONSC 7713, where the Ontario Superior Court found that the employee's ability to work 60 per cent from home was an essential term of her oral employment contract and that the employer's unilateral removal of that term amounted to constructive dismissal. In Hagholm, Rosemary Hagholm worked for Coreio Inc. and its predeces- sors for 22 years. During the course of her employment, Hagholm was allowed to work three days a week at home in the Wa- terloo Region and two days at the office in Vaughan, Ont., which was located approxi- mately 110 kilometres away from her home. In 2017, Coreio informed Hagholm that she could no longer work from home and ordered her to work five days from the of- fice. Because of the traffic volumes that Ms. Hagholm would have encountered on the 401 highway, it would have added approxi- mately three extra hours to her working day and increased her driving costs. On March 1, 2017, Hagholm — who was 59 years old — resigned her managerial position due to the new work schedule, new reporting requirements and a reduction in her bonus. Fol- lowing her involuntary res- ignation, Hagholm launched a wrongful dismissal lawsuit where she claimed to have been constructively dismissed. Constructive dismissal can take two forms: either a single unilateral act that breaches an essential term of the contract or a series of acts that, taken together, show that the em- ployer intended to no longer be bound by the contract. The legal test for constructive dismissal has two branches. First, the court must identify an express or implied contract term that has been breached and then determine whether that breach was sufficiently serious to con- stitute constructive dismissal. Hagholm's lawsuit was adjudicated by way of a summary judgment. Hagholm's ability to work from home was the big- gest factor that the court had to consider in deciding whether or not she was con- structively dismissed. The motions judge, Justice James W. Sloan, sided with Hag- holm and awarded her 22 months' salary in lieu of notice, less 1.5 months for a net of 20.5 months' salary. The deduction of 1.5 months' salary was due to a possibility that Hagholm might find employment before the expiry of the 20.5 months notice period. At the motion, Coreio argued that Hag- holm's work from home ar- rangement was not a term of her employment contract but rather a preference that it had accommodated. It superadd- ed its argument by asserting that upon being notified of the change to her work sched- ule, Hagholm took no steps to engage Coreio in a dialogue to discuss alternative arrange- ment. The court found these arguments legally untenable. With respect to the former argument, the court found there was evidence that, at the time of Hagholm's hiring, Coreio was aware and acknowledged that there was a consider- able distance between her home and the office and that her ability to work from home three days a week was, in essence, a condition precedent to her agreeing to the employment contract. Even though there was nothing in writing between the par- ties, the court found there was oral agree- ment that induced Hagholm to go to work for Coreio. In addition, Hagholm could have argued that working from home was a term by conduct, which was evinced by the parties' conduct. With respect to Coreio's criticism that Hagholm did not see fit to discuss her con- cerns regarding new terms of her contin- ued employment, the court opined "this is a two-edged sword and one that falls more heavily on the defendant employer, than on the plaintiff employee." It appears that Coreio erroneously focused on the effect of and not the breach of an essential con- tractual term itself. There is no obligation for the wronged employee to engage in a discussion with the offending employer vis- à-vis altered or breached terms. Once the counterparty shows its intention not to be bound by the contract, the innocent party has a choice — it may accept the breach and elect to sue immediately for damages or it may choose to treat the contract as subsist- ing, continue to press for performance and bring the action only when the promised performance fails to materialize. In Hagholm, the court found that Co- reio's letters to Hagholm made it clear that it was not prepared to consider allowing her to continue with her employment while at the same time working from home. On that basis, the court had no doubt that Coreio breached an essential term of Hag- holm's contract, which allowed her to work from home 60 per cent of the time. Hagholm reaffirms that if a particularly important contractual term is unilater- ally altered or breached, the employee may have their remedy. In virtually all cases, the primary burden rests on the employee to establish constructive dismissal. LT uNikolay Chsherbinin is an employment and immigration lawyer and author of The Law of Inducement in Canadian Employment Law. He can be reached at 416-907-2587 or by visiting nclaw.ca. Campaign finance reforms put to the test BY SEBASTIAN SPANO O ntarians will go to the polls June 7 for a provincial general election. This election is noteworthy as the first to be conducted under a vastly reformed regime of cam- paign finance that took effect in January 2017, with the coming into force of The Election Finances Statute Law Amendment Act, 2016. Under this new regime, among the important developments is spending limits for third parties that engage in political advertising both during and outside election periods. Coupled with these re- forms are the regulation of political advertising by polit- ical parties outside an election period and the banning of campaign contributions by corporations and unions. One of the broad objectives of the legislation is to "level the playing field" (in the words of Ontario Attor- ney General Yasir Naqvi) between political parties and candidates on the one hand and third parties on the other. Another broad objective is to increase transpar- ency in the financing of campaigns. These reforms are also said to address a perceived need to bring campaign finance rules in line with the fixed-date election sched- ule prescribed in the Elections Act. Lawyers need to be aware of these changes because they risk imposing limits on political expression. One can point, for example, to third parties that engaged in purely issue advocacy that happens to be associated with a political party, its leader or a candidate, whether during or outside of an election period. They may now be subject to a broader regulatory scheme that will re- quire registration with and imposes financial reporting obligations to Elections Ontario upon spending $500 in political advertising. Under the Election Finances Act, third parties are groups or individuals that are neither political parties nor candidates that engage in political advertising to support or oppose a political party, its leader, its can- didates or the issues with which they are closely asso- ciated. Before the legislative reforms, third parties were not subject to the same degree of regulation as polit- ical parties and candidates, with an unlimited ability to raise and spend funds and without any reporting obligations for non-election-period spending or fund- raising. Meanwhile, political parties had been subject to substantial regulation, including spending limits and contribution limits and regular reporting of their sources of contributions. Under the new spending limits, a third party can spend up to $101,800 on political advertising during an election period. In the six-month pre-election per- iod commencing Nov. 9, 2017, they can spend up to $610,800 on political advertising. For political parties, the spending limit on political advertising during the pre-election period is $1,018,000. The limit during the election period would be upwards of $7.5 million if a political party endorses candidates in each electoral district. This is in addition to a separate spending limit applicable to individual candidates. These fundamental changes have important impli- cations for third parties. They are now subject to greater restrictions on their rights of participation in the political process both during and in the six-month period preced- ing an election. Unions and corporations are particularly affected since political advertising will be one of the few means by which to participate in the political process, given the ban on union and corporate contributions. In addition, an expanded definition of political ad- vertising means that the new spending limits, along with the registration and reporting obligations, will be triggered if the political advertising supports or op- poses issues with which a political party or candidate is closely associated or supports or opposes a party leader. Political advertising is one of the few means now available to non-individuals to participate in the pol- itical process, particularly with the prohibition against corporations and unions financially contributing to political campaigns. Not only does the legislation now impose spending limits during an election period, third parties are also subject to limits during what is arguably a lengthy non-election period. The notion of a level playing field has deep roots in Canadian electoral law. It is closely tied to concerns about the undue inf luence of private money in political campaigns, concerns expressed by the Royal Com- mission on Electoral Reform and Party Financing. Its 1991 report has provided the inspiration for many campaign finance reforms enacted in Can- adian jurisdictions. The Supreme Court of Canada, for its part, was guided by the commission report in developing its con- ception of electoral fairness as requiring a level playing field between the various participants in the electoral process. Applying this principle, the court upheld the limits on third-party election advertising as justifiable infringements of s. 2(b) (freedom of expression), s. 2(d) (freedom of association) and s. 3 (voting rights) of the Canadian Charter of Rights and Freedoms (Harper v. Canada (Attorney General), 2004 SCC 33). To be clear, the legislation at issue here did not limit non- election political advertising. As for the fixed-date election regime, since 2005, Ontario's Election Act has prescribed a general election every four years, subject to the lieutenant governor's discretion to dissolve the legislature before the sched- uled date. Where there is an expectation of a specific date for an election but no election writ is issued, pol- itical spending can become, in effect, unregulated, unlimited election spending. Are these objectives sufficiently important? Is there evidence of harm to the electoral process to justify lim- its of this nature on democratic rights? Attempts in one Canadian jurisdiction — British Columbia — to im- pose pre-election spending limits on third parties have not survived a challenge under the Canadian Charter of Rights and Freedoms. Unions in Ontario have already signaled an inten- tion to bring a similar challenge. In the meantime, third parties should be cautious in their political advertising expenditures during this pre-election period and take measures to ensure they comply with registration and reporting requirements. LT uSebastian Spano practises civil and public law litiga- tion in Ottawa. He maintains a keen interest in political financing, ethics and conf lict of interest and lobbying. He may be reached at Sebastian.spano@spanolaw.ca or at 819-664-7448. COMMENT u SPEAKER'S CORNER Labour Pains Nikolay Y. Chsherbinin

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