Packed with valuable information, our publications help you stay in touch with the latest developments in the fields of law affecting you, whatever your sector of activity. Our professionals are committed to keeping you informed of breaking legal news through their analysis of recent judgments, amendments, laws, and regulations.
The return of Christmas parties: what employers need to know
After two years of navigating COVID-19, the end of 2022 will be an opportunity for employers to organise larger activities for their employees, such as Christmas parties. The purpose of this newsletter is to make employers aware of their obligations during the holiday season festivities. Below, we will address the following three issues: industrial accidents, disciplinary measures and psychological harassment. Although Christmas parties are generally held outside of the workplace and outside normal working hours, an incident that occurs on such an occasion may qualify as an “industrial accident” within the meaning of the Act respecting industrial accidents and occupational diseases.1 Courts will consider several factors in weighing whether or not such an incident will constitute a work-related accident, including the purpose of the party, the time and place where it was held, whether or not it is organized and financed by the employer, and the presence or absence of a relationship of subordination at the time of the incident. None of these factors are decisive: they serve as a guideline for the tribunal. As many decisions have both granted2 or rejected3 claims in such circumstances. In one case where a Christmas party had been organized by the employer and was intended to encourage a sense of cohesion and belonging amongst the employees, an injury to the coccyx suffered by an employee while dancing with a co-worker was qualified as an industrial accident.4 However, in another case where an employee was injured on an escalator while escorting a drunken co-worker after a Christmas party, the tribunal ruled that the female employee had not suffered an industrial accident due to the absence of authority exercised by the employer at the time of the fall and also because the event was only intended to permit colleagues to fraternize and spend time together and not to improve the work environment.5 In the context of its management rights, an employer may, in certain circumstances, discipline an employee for behaviour which occurred during a Christmas party.6 The degree of the employer’s involvement in the organization of the party and the private nature of the party are important factors in determining whether the employer is justified in imposing disciplinary measures in such a context. For example, an arbitrator upheld the dismissal of an employee who repeatedly hit a colleague and former spouse during the employer's Christmas party held on its premises.7 The fact that the violent acts were committed during a party rather than in the direct context of work was not considered a mitigating factor. This disciplinary power is part of the employer's obligation to ensure a violence-free workplace. This obligation has gained in importance since the recent addition to the Act respecting occupational health and safety8 of the employer's obligation to “take the measures to ensure the protection of a worker exposed to physical or psychological violence, including spousal, family or sexual violence, in the workplace”.9 In another case, the arbitrator concluded that the employer could not discipline an employee for acts committed at a Christmas party organized and entirely financed by the employees and which took place outside the workplace.10 On another note, a single act of serious conduct at a Christmas party may constitute psychological harassment. A complaint for psychological harassment was upheld against an employer in a situation where the owner had touched the breast of an employee by slipping an ice cube into her sweater.11 This contact, a single gesture, was qualified by the arbitrator as serious conduct amounting to psychological harassment. The arbitrator also concluded that excessive alcohol consumption had no mitigating effect on the seriousness of the act committed. Sexual comments, forced touching and kissing by an employee during the Christmas party were also deemed to constitute psychological and sexual harassment by the courts justifying, in certain circumstances, dismissal.12 Conclusion In light of the foregoing, an employer must exercise caution and adopt measures to reduce the risks associated with the organization of Christmas parties, given that they may be held responsible for accidents or various acts or behaviour that occur during such gatherings.  CQLR, c. A-3.001, s. 2.  See in particular Fafard et Commission scolaire des Trois-Lacs, 2014 QCCLP 6156; Battram et Québec (Ministère de la Justice), 2007 QCCLP 4450.  See in particular Environnement Canada et Lévesque, 2001 CanLII 46818 (QCCLP), par. 35-39; Desjardins et EMD Construction inc., 2007 QCCLP 496.  Boivin et Centre communautaire juridique de l'Estrie, 2011 QCCLP 2645 [.  Roy-Bélanger et Ressources Globales Aéro inc., 2021 QCTAT 1739 [Quebec’s Tribunal administratif du travail].  Teamsters Québec, section locale 1999 et Univar Canada ltée (Jean-Martin Gobeil), 2020 QCTA 344 (L. Viau).  Travailleurs et travailleuses unis de l'alimentation et du commerce, section locale 500 (TUAC-FTQ) et Royal Vézina inc. (St-Hubert) (Hicham Alaoui), 2017 QCTA 304 (F. Lamy).  CQLR, c. S-2.1.  Act respecting occupational health and safety, CQLR, s. 2.1, a. 51, par. 1 (16). This obligation was added pursuant to the Act to modernize the occupational health and safety regime (2021, c. 27, a. 139),  Syndicat de la fonction publique et parapublique du Québec et Société de l'assurance automobile du Québec (Joffrey Lemieux), 2021 QCTA 439 (C. Roy).  S.H. et Compagnie A, 2007 QCCRT 0348, D.T.E. 2007T-722 (T.A.) (F. Giroux).  Pelletier et Sécuritas Canada ltée, 2004 QCCRT 0554 (M. Marchand).
CNESST – Transfer of Costs Under Section 326 of the Act Respecting Industrial Accidents and Occupational Diseases: Important Decision from the Tribunal
Employers subject to the personalized rate or retrospective rate regime know how important it is to control the costs related to occupational injury cases in order to limit the impact on their annual premiums. One way to attain this objective is to apply for a transfer of costs under section 326 of the Act Respecting Industrial Accidents and Occupational Diseases. Indeed, the CNESST may, “on its own initiative or on the application of an employer, impute the cost of benefits payable by reason of an industrial accident to the employers of one, several or all units if the imputation under the first paragraph would have the effect of causing an employer to support unduly the cost of benefits due by reason of an industrial accident imputable to a third person or unduly burdening an employer.” Traditionally, in cases involving the undue burdening of an employer, the CNESST would not process applications for transfers of costs under section 326 as long as the end date of the transfer period remained unknown. This could be detrimental to an employer’s cash flow, especially if the application remained unprocessed and the situation continued to exist over several months, even worse, for years. The recent Corporation d’Urgences-santé1 decision could, in certain circumstances, provide employers with a tool to convince the CNESST to render decisions without an end date for the transfer period. In this file, where Lavery Lawyers represented the employer, the worker could not be temporarily assigned to light duties because of his caregiver status. At the time of the hearing, the employee was still acting as a caregiver and the Tribunal was not in a position to know when the impediment might end. When asked to rule on its jurisdiction and powers, the Tribunal accepted our proposal that the transfer be granted, but that it remains the CNESST’s responsibility to determine the end date of the transfer period. The tribunal ruled that such date ultimately corresponds to the date on which the worker ceases to be incapable of undergoing temporary light-duty assignment due to his caregiver status. Thus, in its decision, the Tribunal recognizes the employer’s right to benefit from a transfer of costs since January 1, 2022, as a result of the employee’s caregiver status. This allows the employer to reduce immediately its financial burden up and until the CNESST renders a decision to establish the date of the occurrence of the event giving rise to the end of the transfer. This is the first decision to be rendered on the issue. It opens the door to a number of possibilities, including requiring the CNESST to make a ruling on a cost transfer application before the full transfer period can be determined. However, this type of application with the CNESST will require case-by-case analysis, as certain conditions must be met for the application to be admissible. If you are dealing with a similar situation requiring special attention, do not hesitate to contact a member of our labour law department specializing in workers’ compensation matters. They will be able to assist you with any questions relating to the management of these cases, whether or not they are the object of litigation. 2022 QCTAT 4634
Ten things you should know about the amendments to Quebec’s Charter of the French language
Quebec recently enacted Bill 96, entitled An Act respecting French, the official and common language of Québec, which aims to overhaul the Charter of the French language. Here are 10 key changes in this law that will impose significant obligations on businesses: As of June 1, 2025, businesses employing more than 25 people (currently the threshold is 50 people) for at least six months will be required to comply with various “francization”1 obligations. Businesses with between 25 and 99 employees may also be ordered by the Office québécois de la langue française (the OQLF)2 to form a francization committee. In addition, at the request of the OQLF, businesses may have to provide a francization program for review within three months. As of June 1, 2025, only trademarks registered in a language other than French (and for which no French version has been filed or registered) will be accepted as an exception to the general principle that trademarks must be translated into French. Unregistered trademarks that are not in French must be accompanied by their French equivalent. The rule is the same for products as well as their labelling and packaging; any writing must be in French. The French text may be accompanied by a translation or translations, but no text in another language may be given greater prominence than the text in French or be made available on more favourable terms. However, as of June 1, 2025, generic or descriptive terms included in a trademark registered in a language other than French (for which no French version has been registered) must be translated into French. In addition, as of June 1, 2025, on public signs and posters visible from outside the premises, (i) French must be markedly predominant (rather than being sufficiently present) and (ii) the display of trademarks that are not in French (for which no French version has been registered) will be limited to registered trademarks. As of June 1, 2022, businesses that offer goods or services to consumers must respect their right to be informed and served in French. In the event of breaches of this obligation, consumers have the right to file a complaint with the OQLF or to request an injunction unless the business has fewer than five employees. In addition, any legal person or company that provides services to the civil administration3 will be required to provide these services in French, including when the services are intended for the public. As of June 1, 2022, subject to certain criteria provided for in the bill, employers are required to draw up the following written documents in French: individual employment contracts4 and communications addressed to a worker or to an association of workers, including communications following the end of the employment relationship with an employee. In addition, other documents such as job application forms, documents relating to working conditions and training documents must be made available in French.5 As of June 1, 2022, employers who wish to require employees to have a certain level of proficiency in a language other than French in order to obtain a position must demonstrate that this requirement is necessary for the performance of the duties related to the position, that it is impossible to proceed using internal resources and that they have made efforts to limit the number of positions in their company requiring knowledge of a language other than French as much as possible. As of June 1, 2023, parties wishing to enter into a consumer contract in a language other than French, or, subject to various exceptions,6 a contract of adhesion that is not a consumer contract, must have received a French version of the contract before agreeing to it. Otherwise, a party can demand that the contract be cancelled without it being necessary to prove harm. As of June 1, 2023, the civil administration will be prohibited from entering into a contract with or granting a subsidy to a business that employs 25 or more people and that does not comply with the following obligations on the use of the French language: obtaining a certificate of registration, sending the OQLF an analysis of the language situation in the business within the time prescribed, or obtaining an attestation of implementation of a francization program or a francization certificate, depending on the case. As of June 1, 2023, all contracts and agreements entered into by the civil administration, as well as all written documents sent to an agency of the civil administration by a legal person or by a business to obtain a permit, an authorization or a subsidy or other form of financial assistance must be drawn up exclusively in French. As of September 1, 2022, a certified French translation must be attached to motions and other pleadings drawn up in English that emanate from a business or legal person that is a party to a pleading in Quebec. The legal person will bear the translation costs. The application of the provisions imposing this obligation has, however, been suspended for the time being by the Superior Court.7 As of September 1, 2022, registrations in the Register of Personal and Movable Real Rights and in the Land Registry Office, in particular registrations of securities, deeds of sale, leases and various other rights, must be made in French. Note that declarations of co-ownership must be filed at the Land Registry Office in French as of June 1, 2022. The lawyers at Lavery know Quebec’s language laws and can help you understand the impact of Bill 96 on your business, as well as inform you of the steps to take to meet these new obligations. Please do not hesitate to contact one of the Lavery team members named in this article for assistance. We invite you to consult the other articles concerning the modifications made to Quebec’s Charter of the French language: Trademarks and Charter of the French language: What can you expect from Bill 96? Amendments to the Charter of the French Language: Impacts on the Insurance Sector “Francization” refers to a process established by the Charter of the French language to ensure the generalized use of French in businesses. The OQLF is the regulatory body responsible for enforcing the Charter of the French language. The civil administration in this law includes any public body in the broad sense of the term. An employee who signed an individual employment contract before June 1, 2022, will have until June 1, 2023, to ask their employer to provide them with a French translation if the employee so wishes. If the individual employment contract is a fixed-term employment contract that ends before June 1, 2024, the employer is not obliged to have it translated into French at the request of the employee. Employers have until June 1, 2023, to have job application forms, documents related to work conditions and training documents translated into French if these are not already available to employees in French. Among these exceptions are employment contracts, loan contracts and contracts used in “relations with persons outside Quebec.” There seems to be a contradiction in the law with regard to individual employment contracts which are contracts of adhesion and for which the obligation to provide a French translation nevertheless seems to apply. Mitchell c. Procureur général du Québec, 2022 QCCS 2983.
Confinement in an institution: a judge must intervene where evidence is insufficient
In a judgement rendered on June 3, 2022,1 the Court of Appeal of Quebec reiterated that a judge who has an application for confinement in an institution before them must inform the parties when they consider that the psychiatric reports filed are insufficiently detailed. In these circumstances, the Court must allow the parties to remedy deficiencies in the evidence rather than dismissing the application. The Court of Appeal based its reasoning on the following articles: Article 268 of the C.C.P.2 allows a judge to draw a lawyer’s attention to any deficiency in the proof of procedure and authorize the parties to remedy it, especially when the judge notes that the insufficient evidence concerns an essential element and could affect the outcome of the dispute. Article 50 of the C.C.P. gives judges the power, even on their own initiative, to require the attendance of witnesses or the presentation of evidence. Given the importance for a judge to make an informed decision, both with respect to a patient’s personal integrity and in assessing the danger they may pose to themselves or to others, the Court of Appeal considers that a judge has an obligation to exercise their discretionary power and require the attendance of one or even both psychiatrists who signed the reports filed in support of an application. In 2009, the Court had previously concluded that a judge in charge of ruling on an application for confinement in an institution is at liberty to [translation] “report, at the time of the hearing, that the references indicated in two sections of the form used by physicians to prepare a psychiatric examination report for an order of confinement in an institution—one concerning the reasons and facts upon which the physician has based their opinion and the other the assessment of the seriousness of the condition and its likely consequences for the patient and for others—appear to them to be insufficient.”3 It appears that this issue has been taken a step further, as the Court has concluded that the discretion granted by articles 50 and 268 of the C.C.P. must be exercised in order to give the health institution applying for confinement the opportunity to complete its evidence. Centre intégré de santé et de services sociaux de l’Outaouais v. J.L., 2022 QCCA 792 Code of Civil Procedure, CQLR c. C-25.01. (C.C.P.) Centre de santé et de services sociaux Pierre Boucher v. A.G., 2009 QCCA 2395, para. 38.
Telework: Better Safe
Telework is not a new phenomenon. According to the International Labour Organization, its rise dates back to the 1970s when a major oil crisis prompted many companies to keep their employees at home to reduce their energy consumption1. That said, since the Covid pandemic, teleworking has become widespread. Now, nearly a quarter of Canadian companies (22.5%) expect that 10% or more of their workforce will continue to telework after business is back to normal2. Needless to say, this mode of work is here to stay. However, teleworking can be a real headache for employers when it comes to injury prevention and occurrence. A more permissive caselaw The Act Respecting Industrial Accidents and Occupational Diseases3(the "AIAOD") may apply to homeworkers4. In fact, the courts have long held that a home can be considered a workplace within the meaning of this Act, where there is part of the work that is performed by the employee with the knowledge and consent of the employer5. In fact, before the pandemic, there were two opposing lines of caselaw regarding the acceptance of workplace injuries when they occurred in the home of the worker who was duly authorized to work remotely. One accepted them, the other denied them. However, it was all a question of circumstances. If the situation fell within the sphere of professional activities, it was accepted, even if it could be considered as part of the personal sphere. 6 However, since the pandemic, in 2020 and 2021, the Administrative Labour Tribunal (the "ALT") has issued several decisions expanding the boundaries of this sphere of professional activities. Several so-called "comfort" activities have been admitted in the context of teleworking, such as falling while walking during a health break7or on the stairs at home at the beginning of the lunch hour8. Similarly, going to the bathroom9, going outside to smoke10, getting a soft drink11, a coffee12, or a dish from the microwave13 could qualify as comfort activities within the sphere of work activities at work, even when teleworking. Although the restrictive trend could still be applied, it is important to note that each situation must be analyzed individually, taking into account the location of the event, the existence and degree of authority over the worker, the purpose of the exercise and its usefulness with respect to the performance of the work. In short, given the increased use of telework, employers should expect to see an increase in such claims. This observation should guide them in the organization of this new work method, especially considering the new amendments to the Act Respecting Occupational Health and Safety (the "AOHS"). Impact of amendments to the Act Respecting Occupational Health and Safety In 2021, the AOHS underwent a number of important changes. One of them is that the Act and its prevention obligations apply to both the worker who teleworks and the employer14. This means that the worker's home or open workspaces are now the employer's responsibility. For example, the obligation set out in section 51(7) of the AOHS, namely that the employer must provide safe equipment and ensure that it is maintained in good condition, applies in this case to the telework environment where the worker is located. This new reality entails obligations for employers and will undoubtedly have an impact on the courts' interpretation of the acceptance of an employment injury. Indeed, as shown in the previous section, recent decisions tend to demonstrate that accidents that occur at home in the context of telework are mostly admissible. Moreover, the new obligation set out in the AOHS according to which the telework environment is under the responsibility of the employer in matters of prevention related to occupational health and safety is likely to be interpreted by the courts as being more conducive to the recognition of workplace injuries. The link is certainly not direct, but the trend in caselaw and the amendment to the AOHS lead us to believe that this will be the case. Recommendations in light of the evolution of caselaw and amendments to the AOHS In light of the above, it would be advisable to establish or revise a telework policy in order to ensure that the obligations of the employer and those of the worker with respect to the telework workplace are clearly defined. For example, depending on the activities that may be carried out, it will be important to define the notion of workplace in a telework environment. To do so, each employer will have to ask itself many questions, such as: Do you want to allow teleworking in a cooperative teleworking location? What measures can be put in place to ensure that prevention obligations are met and that occupational injuries are avoided? Who will be responsible for ensuring that the employer's obligations regarding prevention are met in a context where the employee works remotely? How to manage employees who are outside the country? In short, all these questions will have to be analyzed in the context of drafting or rewriting a telework policy. The members of the Labour and Employment Law team remain available to assist you in your reflection and in the revision of your policy, if necessary. International Labour Organization, Challenges and Opportunities of Teleworking for Workers and Employers in the ICTS and Financial Services Sectors, Geneva, 2016. Statistics Canada, Canadian Survey on Business Conditions: Impact of COVID-19 on businesses in Canada, May 2020. CQLR, c. A-3.001. Club des petits déjeuners du Québec c. M.C. Frappier, 2009 QCCLP 7647. Quebecor Media Inc. et Marco Delgadillo, 2011 QCCLP 4843. Desrochers et Agence de revenu du Canada, 2011 QCCLP 7562; Futura manufacturier de portes & fenêtres inc. et Rossignol, 2020 QCTAT 2562; Benoît et NCH Canada inc, 2021 QCTAT 856. Laverdière et Ministère des Forêts, de la Faune et des Parcs (Opérations régionales), 2021 QCTAT 5644. Air Canada et Gentile-Patti, 2021 QCTAT 5829. Lefèbvre (Re), 2006 CanLII 70745 (QC CLP). Miljours et Ameublement Branchaud, 2016 QCTAT 809. Cormier et Société des Entreprises Innues d'Ekuanitshit (2009), 2019 QCTAT 3752, Robillard et DPCP, 2020 QCTAT 2933. Giroux et Pro Mec Élite inc, 2014 QCCLP 2853. Beaudry et Ministère de la Sécurité publique (Santé-sécurité), 2004 CanLII 92916 (QC CLP). AOHS, sec. 5.1.
Improved Protection of Trainees in the Workplace: Key Points
On February 24, Bill 14, An Act to ensure the Protection of Trainees in the workplace (hereinafter the “Act”), received assent. The purpose of this Act is to provide better protection for people completing a training in a workplace. For this reason, it contains several provisions similar to those found in the Act respecting labour standards1 (hereinafter the “ALS”). First of all, the Act covers training that is required to obtain a permit to practice issued by a professional order or as part of a program of studies or training program offered by an educational institution that leads to a diploma, certificate or attestation of studies.2 The protection of trainees applies whether the training is paid or not and regardless of where the training is carried out in the workplace, as long as the employer’s residence, domicile, business, head office or office is located in Quebec. It also applies to trainees domiciled or resident in Quebec who do training outside Quebec with an employer.3 OBLIGATIONS FOR THE EMPLOYER The employer, the educational institution and the professional order must inform all trainees of the rights provided for in the Act, allow trainees to be absent for the various reasons provided for in the Act, and ensure that the successful completion of the studies or training, or the obtainment of the permit to practice, is not compromised by the exercise of a right provided for in the Act.4 The legislator expressly provides that the standards relating to training conditions contained in this Act are of public order and that any provision of an agreement or decree that departs from them is absolutely null.5 However, as is the case with the ALS, it is possible to grant trainees more advantageous conditions for completing the training than those prescribed by this Act. PROTECTIONS FOR TRAINEES In line with the provisions already found in the ALS, the Act expands the protection of trainees with respect to statutory holidays, absences and psychological harassment. Statutory holidays: A trainee may be absent from their training on the following days:6 January 1; Good Friday or Easter Monday (employer’s choice); The Monday preceding May 25; June 24; July 1 (or, if this date falls on a Sunday, July 2); The first Monday in September; The second Monday in October ; December 25. However, if the trainee is required to participate in their training on any of these days, they are entitled to a compensatory holiday of one day, to be taken during the training period done with the same employer. There are special provisions for the statutory holiday on June 24.7 Absences due to sickness or family/parental reasons: A trainee may be absent from their training on the following days: Ten (10) days per year due to sickness, to fulfill obligations related to the care, health or education of the trainee’s child or spouse’s child, or due to the health condition of a relative or person for whom the trainee is acting as a caregiver;8 One (1) or five (5) days on the occasion of the death or funeral of a close relative, with the length of the absence determined by the relationship;9 One (1) day on the day of their wedding or civil union, or that of one of the family members listed;10 Five (5) days on the occasion of the birth or adoption of a child, or when a termination of pregnancy occurs after the twentieth (20th) week of pregnancy;11 and For a medical examination related to the trainee’s pregnancy.12 Psychological harassment: The Act provides that every trainee has the right to a training environment free of psychological harassment. The employer and, as the case may be, the educational institution or professional order, must take reasonable measures to prevent psychological harassment and, when such conduct is brought to their attention, to protect the trainee and put a stop to it. The psychological harassment prevention and complaint processing policy must be made available to trainees and applied to them with the necessary adaptations.13 RECOURSE The Commission des normes, de la santé et de la sécurité du travail (hereinafter, the “CNESST”) supervises the implementation and application of the training conditions provided for in the Act.14 Prohibited practices: No employer, educational institution or professional order, or their agents, may end training or dismiss, suspend or transfer, practise discrimination or take reprisals against, or otherwise impose any sanction on a trainee as a result of the trainee exercising a right under the Act, or for certain grounds under section 122 of the ALS.15 A trainee who believes that they have been the victim of a prohibited practice may file a complaint with the CNESST within forty-five (45) days of the occurrence. A non-profit organization dedicated to the defence of students’ rights, a students’ association or a students’ association alliance can also file a complaint with the CNESST on behalf of a trainee who consents to it.16 If it is established to the satisfaction of the Administrative Labour Tribunal (ALT) that the trainee exercised a right arising from the Act, there is a simple presumption in the trainee’s favour that the sanction or measure was imposed because of the exercise of that right. In this case, the employer, educational institution or professional order has to prove that the sanction or action was taken for good and sufficient reason.17 Psychological harassment: A trainee or, as the case may be, a non-profit organization dedicated to the defence of students’ rights, a students’ association or a students’ association alliance, can file a complaint with the CNESST if the trainee believes they have been a victim of psychological harassment. This complaint must be filed within two (2) years of the last occurrence of the conduct. However, the trainee may not file a complaint with the CNESST if they are an employee covered by a collective agreement, insofar as a recourse against psychological harassment is available to the employee under the agreement.18 If the ALT concludes that a trainee has been the victim of a prohibited practice or psychological harassment, it may, among other things, order that the trainee be reinstated in their training with all their rights and privileges, that accommodation measures be implemented, or order to comply with any other measure intended to safeguard the trainee's rights, such as a provisional order.19 PENAL SANCTIONS Any person that contravenes the Act, including by offering training conditions inferior to those specified in the Act, is liable to a fine of $600 to $1,200 and, in the case of a subsequent offence, $1,200 to $6,000.20 The members of our Labour and Employment Law group are available to advise you and answer your questions. CQLR, c. N-1.1. Section 1. Section 1. Section 4. Section 6. Sections 9 and 10. Section 10. Depending on the situation, trainees have the right to be absent on June 25 or the right to a compensatory holiday of one day, to be taken either on the business day before or after June 24, or during the training period done with the same employer. Section 11. Sections 12 and 13. Section 14. Section 15. Section 17. Section 19. Section 7. Section 20. Section 21. Section 25. Section 26. Section 30. Section 32.
A dismissed employee’s obligation to mitigate damages in the context of the COVID-19 pandemic
Over the years, the Quebec courts have repeatedly stated that dismissed employees have a duty to mitigate the damages they suffer as a result of a dismissal. This obligation, which is now codified in the Civil Code of Québec,1 has been adapted to the circumstances of the cases over which the courts have presided. The question, then, is whether the COVID-19 pandemic is likely to have an impact on a dismissed employee’s obligation to mitigate damages. The Administrative Labour Tribunal (hereinafter the “ALT”) addressed this issue in its recent decision Tourigny c. Fonds de solidarité des travailleurs du Québec (FTQ)2 (hereinafter the “Tourigny decision”). Background On August 30, 2021, the ALT upheld Ms. Tourigny’s complaint against a dismissal made without a good and sufficient cause under section 124 of the Act respecting labour standards.3 The complainant, who held a position as director of the Direction Marketing Investissement department before being dismissed on January 28, 2019, claimed, in particular, the wages she lost as a result of her dismissal up to the date of the ALT decision upholding her complaint. The employer argued that the complainant had failed in her duty to mitigate her losses. For her part, the complainant felt that she had done everything in her power to find a job quickly. It should be noted that the COVID-19 pandemic began while the complaint was being heard in court. Decision on the obligation to mitigate losses The ALT reiterated, quoting the decision in Durocher c. Lisam America Inc.,4 that dismissed employees have a duty to mitigate damages resulting from their dismissal, even when they are dismissed without good and sufficient cause. This obligation is one of means and is assessed based on the circumstances of each case using the reasonable person test. The ALT further noted, quoting the decision in Agropur, Division Natrel c. Teamsters Québec local 1999 (Montpetit),5 that the duty to mitigate damages consists of two components, namely (1) to make reasonable efforts to find new employment, and (2) not to refuse an offer of employment that is reasonable in the circumstances. In the Tourigny decision, the ALT confirmed that the complainant had failed to mitigate her losses. As such, it reduced the indemnity for lost wages by $34,000, finding that, given the pandemic and the scarcity of job offers, the complainant should have conducted a more thorough job search and been more open to positions that did not perfectly match the job she held prior to her dismissal. Thus, the ALT stated the following:  For the Tribunal, during a recession or even a pandemic, when job offers are less important and less financially attractive than in normal times, one must, on one hand, expect to conduct a more rigorous search.  On the other hand, one must be more open to offers which, even if they do not correspond exactly to those held in the previous job, are related to the expertise or jobs already held. [our translation]In short, with the pandemic in mind, the ALT deducted two (2) months of gross salary from the indemnity for lost wages, which amounted to $34,000, because: The complainant had taken two (2) trips abroad of about ten days each in the first few months following her dismissal, and the employer did not have to assume the financial consequences of the complainant’s choice to do so; The complainant had been in a management position for a short time and limited her job search to positions similar to the one she held prior to her dismissal. However, limiting herself to management positions with working conditions similar to those she had with the employer—which were exceptional—did not demonstrate a willingness to mitigate her damages. Thus, according to the ALT, the complainant had set aside several positions that could have provided her with a substantial income; and The complainant had applied for only one job during the first eight (8) months following her dismissal and thirty-eight (38) jobs over the next twenty (20) months, that is, fewer than two (2) jobs per month. Her job search efforts were therefore not considered sufficient. Conclusion In short, the Tourigny decision confirms that the context in which employees find themselves is relevant in determining the extent of their obligation to mitigate the damages they suffer as a result of their dismissal. In theory, employers should not be penalized when a dismissed employee fails to put in the necessary effort to find a job during challenging economic times. In circumstances such as these, arising from, say, a pandemic, a dismissed employee must make greater efforts to find a job, failing which the indemnity paid by their former employer may be reduced considerably. The members of our Labour and Employment Law group are available to counsel you and answer your questions. CQLR, c. CCQ 1991, art. 1479. 2021 QCTAT 5548. CQLR, c. N-1.1. 2020 QCTAT 4648. 2018 QCTA 445.
Minimal! - Court of Appeal Reduces the Post-Employment Duty of Loyalty
Suppose that your best employee, the up-and-comer you’ve been training for several years, resigns. It’s terrible news for you, especially amid a labour shortage. And, to top it off, their new employer is your main competitor. How long has the employee been planning to leave? Did they plan during working hours? Using your company’s resources? What about the knowledge and contacts gained over the past few years: Will the employee share them with your competitor? If they did so, would it be illegal? At this point, one of your main concerns would be whether the resigning employee’s employment contract contains restrictive covenants, such as non-competition, non-solicitation or confidentiality undertakings. If it did, it would bode well for you provided that the covenants are valid and enforceable. You would otherwise have to rely on the duty of loyalty provided for in article 2088 of the Civil Code of Québec, a safety net that employers have relied on until a recent decision of the Court of Appeal of Québec limited its scope. Sahlaoui c. Médicus1 Mr. Sahlaoui, an orthotist-prosthetist, had been working for Médicus for about ten years, during which time he had built a relationship of trust with clients thanks to the quality of his services. He informed Médicus that he was resigning to start a competing company, Evo. Accusing Mr. Sahlaoui of breaching his duty of loyalty, Médicus sued him and his new company, claiming damages for one year’s lost profits, for hardship and inconvenience. The Superior Court awarded Médicus damages in the sum of $135,238, plus interest. However, the Court of Appeal dismissed Médicus’ recourse in its entirety and reaffirmed the right to freedom of work, concluding that the former employee, both before and after his resignation, had not breached his duty of loyalty. The Court thus considers that the duty of loyalty provided for in the Civil Code of Québec must be assessed in two stages, namely during and after employment. Duty during employment In the course of employment, an employee’s duty of loyalty is significant, especially for key employees and those with a great deal of professional discretion. The close ties that Mr. Sahlaoui had developed with clients during his employment were not enough to convince the Court that he had held a key position in his employer’s business, which, it should be noted, had approximately 350 employees at 15 branches. The Court is of the opinion that seeking new work does not in itself constitute a breach of the duty of loyalty, as it is an extension of the freedom of work. There are legitimate limits to the openness and transparency required under the terms of an employment contract, such that an employee may keep both their intention to change jobs and the steps taken to do so secret.2 On the other hand, the employee, while still employed, must not prepare their departure during working hours with tools provided by the employer. Stealing or hacking confidential information, withholding or misappropriating the employer’s business opportunities, taking client lists and recruiting clients for the employee’s benefit are examples of disloyal acts that the Court mentions. The judges cite with approval a 2007 decision of their court, which held that retaining or “refusing to turn over a former employer’s property in some cases constitutes outright theft, regardless of the notion of loyalty.”3 Duty after employment The Court of Appeal believes that the duty of loyalty is considerably reduced after an employee’s departure. The duty of loyalty set out in the Civil Code of Québec does not impose restrictions on an employee equivalent to those resulting from a well-drafted non-competition clause,4 particularly in terms of duration, because the duty of loyalty remains in effect for only a reasonable amount of time, which rarely exceeds a few months (three to four months).5 In this case, although Mr. Sahlaoui had signed a loyalty, confidentiality and non-competition undertaking to govern his post-employment conduct, the Court disregarded it because such undertaking did not meet the requirements for restrictive covenants established by the courts. Mr. Sahlaoui’s actions were therefore analyzed in terms of the duty of loyalty set out in article 2088 of the Civil Code of Québec. As the Court of Appeal points out, an employee who is not subject to a non-competition clause (or a non-solicitation or confidentiality clause having a term that exceeds the end of employment) may use their personal professional experience, i.e., their expertise, knowledge, network and skills acquired and developed with the former employer, as they see fit. Such employee may compete with their former employer, by soliciting its clientele, for example, without committing a fault.6 In short, the duty of loyalty under the Civil Code of Québec does not prohibit competition, but requires that it be exercised in moderation and only for a short time after employment ends. What it means Because the duty of loyalty is “rather minimal,” to quote the Court of Appeal, any organization would be well advised to protect itself by using restrictive clauses and having a clear plan of action for when an employee leaves to join the competition. To be enforceable, restrictive covenants must be specific and contextual. They must not exceed what is reasonable to protect the legitimate interests of the employer. The following questions are worth considering: When preparing an employment contract, is it possible to predict whether the employee in question will have direct relations with clients or suppliers? Will the employee learn, for example, the manufacturing processes or techniques that the organization strives to safeguard? If so, what restrictive clauses should be included in the employment contract, in particular regarding the nature of the employee’s tasks, reporting level and unique expertise? What needs to be protected? Examples include the confidentiality of information and the business’ reputation and services. The business should also protect itself against competition and solicitation of its clientele, suppliers and employees. To avoid unpleasant surprises, it is important to understand the purpose of each restrictive clause. They should also not be confused between them or thought to encompass the restrictions of another. Do the restrictive clauses meet the reasonable criteria necessary to be enforceable? Will they withstand contestation to the extent possible? Once the employee’s departure is announced, who will take over with clients or suppliers in order to maintain their trust? What security measures will be put in place when the departure is announced to ensure and preserve the confidentiality of certain information? The absence of restrictive covenants at the time of hiring is not disastrous, as the parties may negotiate such undertakings during the course of employment. While an employee cannot be forced to accept them, it is easier to reach an agreement when discussing a salary increase, promotion or other consideration, always making sure that the restrictive clauses are reasonable in light of the employee’s work context and the employer’s legitimate needs and rights. The parties may also agree to certain restrictions as part of an exit agreement. The Médicus decision has, at the very least, clarified the scope of the duty of loyalty provided for in the Civil Code of Québec. The members of our Labour and Employment Law group are available to advise you and answer your questions. Sahlaoui c. 2330-2029 Québec inc. (Médicus), 2021 QCCA 1310, see paragraph 59. See paragraph 35. Concentrés scientifiques Bélisle inc. c. Lyrco Nutrition inc. 2007 QCCA 676. See paragraph 44. See paragraph 48. See paragraph 53.
Constructive dismissal and mitigation of damages: Is there an obligation to accept another position offered by the employer?
The Supreme Court of Canada has previously addressed this issue in Evans v. Teamsters Local Union No. 311 and concluded that, in certain circumstances, when an employer offers a new position to a dismissed employee, the latter may have to accept it in order to mitigate their losses. A few years later, in 2108805 Ontario inc. c. Boulad,2 the Court of Appeal stated that such acceptance is not automatically required because an employee cannot be forced to accept a position offered without mutual understanding and respect between the parties. More recently, the courts have indicated that acceptance of a position with a former employer is indeed not automatically required and emphasized the importance of analyzing the totality of the circumstances when determining whether an employee must accept an offer from their former employer. In short, the issue is whether a reasonable person in the same situation would accept the employer’s offer. Both the tangible aspects, such as the nature and conditions of employment, as well as the intangible aspects, such as work climate and the preservation of the employee’s dignity, are essential and must be considered. Mitigation of damages In determining whether an employee has been constructively dismissed, the question is whether a reasonable person in the same circumstances would have considered there to be a substantial change to the essential conditions of their employment contract. In St-Laurent c. Cosmétiques Baronesse inc.,3 the Administrative Labour Tribunal («ALT») responded to this question by confirming that each situation is unique. In this case, the ALT concluded, on the basis of all the facts and the relationship between the parties, that the plaintiff was not required to mitigate her damages by agreeing to a change of territory, given that such a change was not compatible with her family obligations. The employer, a distributor of cosmetic products for beauty salon and spa professionals, had offered the plaintiff, a resident of Chambly, the position of sales representative for the South Shore. The territory for which she would have been responsible stretched from Boucherville to Drummondville, and from Brossard to Sherbrooke. It also included Vaudreuil. When a portion of Montréal’s downtown and the West Island was added to her territory, the plaintiff, who had joint custody of her children and had them in her care every other week, was given flexibility in her schedule to care for her children. After an absence due to disability, the plaintiff was informed of the need to adhere to a strict schedule and that, because of client complaints, she would instead be assigned to the territory of the North Shore (Laval, Laurentides, Ottawa and Gatineau), with the obligation to work more than 40 hours per week, despite her attending physician’s advice to the contrary. The ALT first pointed out that the undisputed evidence showed that the plaintiff had initially accepted the representative position because the employer offered her the opportunity to work on the South Shore and a flexible schedule. The ALT added that the employer had not established policies or practices whereby territorial changes could be made on a regular basis or in certain circumstances. Finally, the ALT noted the employer’s failure to attempt to adjust the schedule or sales territory, even though it had hired two representatives to replace the plaintiff and reorganized the territory for them. Placed in this situation without further modification, the plaintiff had no choice but to refuse the changes. The ALT confirmed the absence of a resignation and upheld the complaint for constructive dismissal. Notice of termination Dismissed employees have a duty to mitigate their damages, meaning that they must make reasonable efforts to find employment in their field or a related field, and they must not refuse offers of employment that are deemed to be reasonable in the circumstances. The assessment of a reasonable notice period is a question of fact that must take into consideration the specifics of the entire situation. The question of whether the notice period should be reduced due to the employees’ failure to fulfil their obligation to mitigate their damages—which is an obligation of means—is also essentially a question of fact.4 This is another example of something which requires a case-by-case assessment. What to look for when assessing the terms offered to a person facing a termination of employment In short, although it may be reasonable for an employee whose position has been eliminated to accept a job offered by their employer to mitigate their damages, it is not a given. All facts and circumstances must be considered. In assessing the position and terms offered to such an employee, and in order to validly claim that the employee is required to mitigate their damages, a prudent manager should determine whether there are barriers to continued employment under these conditions. In particular, this manager should consider whether a reasonable person placed in the same situation would accept the position, notably because the employee would not suffer embarrassment, humiliation, hostility or loss of dignity in doing so. Our Labour and Employment Law team is available to advise you and answer your questions. 2008 SCC 20. 2016 QCCA 75. 2021 QCTAT 3732. CISSS des Laurentides c. St-Arnaud, 2021 QCSC 2071.
Abuse of the grievance arbitration process: Arbitrators rule in favour of employers
An employer grievance is a means that employers can use to obtain compensation for material damages caused by pressure tactics or to recover overpayments resulting from a union’s wrongdoing. Such a recourse can also be filed to claim damages and legal fees from a union that has abused the grievance arbitration process, in particular by raising grounds that are unfounded or filing applications that are dilatory, or doing either in bad faith. Although not very common, abuse of process does exist and can be sanctioned. However, an employer can successfully raise abuse of rights when a union’s actions are reckless, manifestly ill-founded, done in bad faith or dilatory. Two recent cases The decision in Régie intermunicipale de police Richelieu Saint-Laurent et Fraternité des policiers et policières Richelieu Saint-Laurent1 is an interesting example: The arbitrator ordered the union to reimburse the employer part of the legal costs that it had incurred, as well as the sums paid to three of its witnesses. The case can be summarized as follows. As a result of pressure tactics, three police were summoned to a disciplinary hearing before the discipline committee. The parties agreed in writing to reschedule the hearings before the committee. The officers were finally met in 2014, after which they filed grievances to contest the disciplinary measures taken against them. Arbitration was set for May 2018 and a pre-trial conference was held prior to the hearing. At the hearing, the union raised a preliminary exception on the grounds that the disciplinary measures had been imposed outside the time limit set out in the collective agreement. The employer invited the union to make verifications, maintaining that the parties had agreed to postpone the hearing before the discipline committee. The union upheld its preliminary exception. The employer then filed a grievance, claiming damages arising from the union’s time-barred and unfounded preliminary exception. In January 2019, the parties presented their arguments on the preliminary exception and the employer grievance. On February 14, the union withdrew its preliminary exception during deliberations. The arbitrator allowed the employer grievance in part. He concluded that the exception filed by the union was unfounded and that the latter’s conduct was a clear example of an abuse of legal process. The employer was compensated for the costs incurred in defending itself against the abuse of rights. In Syndicat des professeures(eurs) de l'UQAM (SPUQ) et Université du Québec à Montréal (UQAM),2 the parties had recently renewed their collective agreement and agreed to a clause providing for a reduction in the salary of professors over 70. Shortly after the collective agreement came into force, grievances were filed challenging the discriminatory nature of the clause. UQAM filed an employer grievance alleging abuse of the grievance process by the union. The evidence showed that the union had agreed to the clause even though it knew that it was discriminatory, with the intention of challenging it in arbitration. The union had even asked that the age of the professors be added to the clause, which made its discriminatory nature even more obvious, thereby maximizing its chances of success at arbitration. The arbitrator allowed the employer grievance and ordered the union to reimburse the arbitrator’s fees and disbursements, as well as the professional fees charged by the employer’s lawyer to represent it during arbitration of the union grievance. He concluded that the union’s actions violated the duty to bargain in good faith and constituted an abuse of rights on the union’s part. Key takeaway and helpful tips Abuse of process can take many forms: the use of an unfounded declinatory exception, for example, or the filing of an abusive grievance arising from collective bargaining in bad faith. When confronted with situations not seen in the ordinary course of labour relations, an employer must determine whether there has been abuse of rights. Should abuse of rights be found, the employer could exceptionally claim the professional fees of its lawyers, the cost of summoning witnesses and possibly other damages resulting from the union’s wrongful conduct by filing an employer grievance. However, employers must bear in mind that an ill-founded union grievance, dismissed on the basis that the union’s interpretation of the facts or collective agreement differs from that of the employer, will not necessarily be deemed abusive. In order to win the case, the employer will have to prove that the union’s actions were reckless, manifestly ill-founded, in bad faith or dilatory. It goes without saying that an abuse of procedure by an employer could also be sanctioned by damages. The members of our Labour and Employment Law team are available to advise you and answer your questions. 2021 QCTA 319. 2021 QCTA 296.
Work, Lockdown and Curfew: Answers to Your Questions
In order to reduce community transmission and preserve everyone’s safety and that of our healthcare system, the government requires everyone to make extra efforts, both in their private lives and at work. The closure of retail businesses, save for some exceptions, is maintained, the lockdown to prevent gatherings continues and a curfew was added on January 9, 2021, to remain in effect until the currently announced date of February 8, 20211. How can employers review their work organization to the extent possible for them while complying with government guidelines? Here are a few questions and answers to clarify the situation. With the curfew in effect, do I need to review my work organization and schedules if my activities are not suspended or prohibited? If you operate an essential retail business, you are required to review your employees’ schedules and work hours in order to abide by the curfew and allow your employees to leave your business no later than 7:30 p.m. in order to be home by 8 p.m. Companies in the construction, manufacturing and primary processing industries must reduce their activities “to pursue only those activities necessary to fulfil their commitments” (our translation): To properly measure the scope of this requirement, the guidelines and directives issued by the authorities (including CNESST) must be closely followed. However, on the basis of this statement in the Decree adopted on the evening of January 8, 2021, in order to be able to demonstrate the steps taken to comply with directives, companies should review confirmed contracts and orders, agreed-upon delivery dates and inherent production delays to modify work planning (e.g. priority orders to be delivered by February 8, 2021, staff work days and hours, evening and night shifts). In its online communications, the Government of Quebec asks not only that activities be reduced to a minimum to complete commitments, but also that shifts be adjusted to limit the staff present at any time on production and construction sites. Businesses in this situation may require special negotiations to make the necessary adjustments given working conditions, policies or collective agreements in place. When should I consider temporary layoffs due to a reduction in my activities as a result of the increased lockdown or curfew? Subject to the provisions of a collective agreement or employment contract (e.g. guaranteed hours of work), an employer may consider reorganizing work and allocating working hours among employees by coming to an agreement on temporary working conditions with them to avoid layoffs. If such an agreement is not possible for legal, organizational or efficiency reasons, layoffs may be considered: With confirmation of the layoffs as being related to COVID-19, in which case concerned employees can verify their eligibility for the Canada Recovery Benefit or EI benefits depending on the circumstances. An employer should also document the reasons behind temporary layoffs and, for example, in its determination of who is affected according to the organization’s applicable criteria, for recall purposes and analysis of whether or not extending such layoffs is necessary. How do I protect my essential employees who would have to travel during curfew to get to work or return home? For each employee required to travel during the 8 p.m. to 5 a.m. curfew, the employer must prepare an explanatory letter (attestation letter) as evidence that the employer’s activities are authorized under the applicable directives and that the employee’s work is essential to carrying out authorized activities (this includes transporting goods required for such activities). The attestation letter must include information that could reasonably lead the police to conclude that the employee is allowed to travel during the curfew because that employee qualifies for one of the exceptions provided by the government. Exceptions are known to be interpreted restrictively. On the basis of the form letter issued by the government and the purpose of the attestation letter, this letter should include information such as: The name of the employer and its authorized representative (with letterhead confirming the company’s contact information, including its website). The nature of the employer’s activities. The employee’s duties, home address and work contact information. The employee’s work schedule. The contact information and telephone number of the person available between 8 p.m. and 5 a.m. to provide details to police officers who may stop the employee (this person must be familiar with the employer’s authorized activities involving the employee as well as the employee’s position and schedule). The validity period of the attestation and its date of signature. I operate a retail business that is not identified as an authorized priority business since December 25, 2020. Can I operate and sell goods online and how can my customers retrieve their purchases? E-commerce is allowed, even for non-essential goods (sales can also be completed by phone). The key points: Telework should be maximized as much as possible, with physical presence being limited to only those employees whose presence is essential to the workplace. Goods can be delivered or picked up at the door without entering a store. Payment must be made by telephone if a sale is made in this way and without the customer entering the business. We will follow developments and keep you informed as it is important to keep track of possible—and often frequent changes and adjustments brought to the directives. The professionals of our Labour and Employment team are available to advise you and answer your questions. See https://www.quebec.ca/en/health/health-issues/a-z/2019-coronavirus/confinement-in-quebec/ and the January 8, 2021, Order in Council 2-2021 Ordering of measures to protect the health of the population amid the COVID-19 pandemic situation.
Teleworking: What are the allowable expenses for employees and tax impacts for employers?
The COVID-19 pandemic has changed Canadian workplaces. For many organizations, the pandemic and its containment measures have fast-tracked the shift to teleworking. In this context, the Canada Revenue Agency (the “CRA”) and the Agence du Revenu du Québec (the“ARQ”) have published administrative positions regarding deductible expenses for employees working from home as well as for their employers. Eligible expenses for an EMPLOYEE The first condition for claiming employment expenses related to teleworking involves being obliged to work from home. The CRA has announced some flexibility in this regard, to the effect that if an employer did not require an employee to work from home but gave them the option to do so because of the COVID-19 pandemic, the CRA will consider the employee to have worked from home as a result of the pandemic. Temporary flat rate method: Federal and Quebec deduction of $2 per day without Form T2200 On December 15, 2020, the Government of Canada announced that employees who worked from home more than 50% of the time for at least four consecutive weeks in 2020 will be able to deduct $2 from their incomefor each day worked during that period and for each additional day worked outside that period, for a maximum of $400. The temporary flat rate method only applies to the 2020 taxation year. To qualify, the employee must only deduct only home office expenses and no other employment expenses. Details of expenses incurred for with teleworking or Form T2200 will not be required to claim this deduction. On December 16, 2020, the Government of Quebec followed the Government of Canada’s lead by announcing that taxpayers would be allowed to deduct $2 per day for each day worked from home, up to a maximum of $400, without supporting documents or a TP-64.3 form. Detailed method In general, an employee (whether a tenant or a homeowner) may deduct reasonable expenses directly related to the use of space in the home for work if and only if at least one of the following two conditions is met: (i) The space devoted to work in the home is “the place where the individual principally (interpreted by the courts to be more than 50% of the time) performs the office or employment duties”; or (ii) The workspace in the home is “used exclusively [...] to earn income from the office or employment and, on a regular and continuous basis, for meeting customers or other persons in the ordinary course of performing the office or employment duties.” The period used to assess eligibility criteria for 2020 must be at least four consecutive weeks. This period may last more than a month. If the workspace is part of a residence rented by the individual, a reasonable portion of the rent may be deductible. However, an individual may not claim any deduction for the rental value of the workspace in a home owned by the individual or for amortization, taxes, insurance or mortgage interest in respect of that home. Notwithstanding the above restrictions, the Income Tax Act provides that employees remunerated by commissions may deduct a reasonable portion of the taxes and insurance paid for the home they own, if one of the above criteria is met. It is important to note that these expenses are eligible only to the extent that they are not otherwise reimbursed by the employer. In order to determine the amount that can be deducted in this way, it is important to use a reasonable basis for calculation.For example, the calculation can be based on the area of the workspace in proportion to the total area of the home. Other possible uses of space must also be considered. The use of 100% compared to 75% of the space by an employee is an important factor in the calculation. For example, a kitchen table used as office space by an employee will have mixed use, which will have a direct impact on the amount of deductible expenses. Eligible expenses(salaried employees and those remunerated by commission) Electricity Heating Water Utility portion (electricity, heat and water) of the employee’s condominium fees Home internet service costs Maintenance and minor repair costs Rent paid for the house or apartment where the employee lives Eligible expenses(employees remunerated by commission only) Home insurance Property taxes Rental of a cell phone, computer, laptop, tablet, fax machine, etc. that is reasonably related to commission income Ineligible expenses(salaried employees and those remunerated by commission) Mortgage interest Mortgage payments Internet connection fees Furniture Capital expenses (replacement of windows, floors, furnace, etc.) Wall decorations Note that if an employee can deduct an expense in calculating taxable income for income tax purposes, they may also qualify for a refund of the Goods and Services Tax / Quebec Sales Tax (“GST/QST”) paid. GST and QST refunds are taxable and must be included in the employee’s income tax return the following year. It is also important for the employee to keep supporting documents. The CRA recently developed an expense calculator to simplify calculating eligible expenses. An employee will have to complete the following forms to deduct expenses and obtain GST and QST refunds: a) T777 – Statement of Employment Expenses; b) TP-59 – Employment Expenses of Salaried Employees; c) GST370 – GST/HST Rebate Application; and d) VD-358 – QST Rebate for Employees. In order to deduct employment expenses from income, including certain expenses related to space devoted to working from home, the employee must have received two forms from the employer: a) Form T2200 - Declaration of Conditions of Employment (“T2200”); and b) Form TP-64.3 General Employment Conditions (“TP-64.3”) (Quebec employee only). Considerations for the employer On December 15, 2020, the CRA announced the launch of a simplified process to claim home office expenses for the 2020 tax year. Accordingly, a simplified version of Form T2200 was made available as Form T2200S. The form may be found here. In order for an employee to be able to deduct the expenses described above, Form T2200S must indicate: If the employee worked at home because of the COVID-19 pandemic; If the employer reimbursed or will reimburse the employee for some of the home office expenses; and If the amount was included on the employee’s T4 slip. Finally, the employer will have to certify that “this employee worked from home in 2020 due to COVID-19, and was required to pay some or all their own home office expenses used directly in their work while carrying out their duties of employment during that period.” It is expected that a large number of employees will meet the criteria for this deduction, at least as long as the workplace access restrictions attributable to COVID-19 remain in place. The ARQ, for its part, has announced that, exceptionally, an electronic signature of the employer on the TP-64.3 form would be permitted. In addition, on December 16, 2020, the Government of Quebec announced that it will launch, in early 2021, an online service for generating a large number of TP-64.3 forms to be sent to teleworkers. This service aims to reduce the administrative burden on medium and large companies. More information on the online platform is expected in 2021. Other eligible expenses for an employee An employee will also be able to deduct certain expenses for supplies consumed directly in the course of their duties to the extent that they are not reimbursed by the employer, such as: a) Paper, pencils and ink cartridges; b) Internet costs, if they are charged based on usage. To this end, the CRA has announced that for the 2020 taxation year, it will exceptionally accept monthly residential internet service costs (the cost of the plan must be reasonable). Expenses reimbursed by an employer Normally, an amount received from an employer to reimburse an expense is considered a benefit to the employee and must be added to the employee’s employment income, unless such expenses are necessary for the performance of the employee’s duties. Employees may not deduct reimbursed expenses. In addition, in the current context, the CRA and the ARQ have announced that the reimbursement of $500 by an employer to an employee to offset the cost of acquiring personal computer equipment or office equipment required for telework does not constitute a taxable benefit to the employee. For example, if the purchase is a $1,000 desk, the taxable benefit included in the employee’s income will be $500. The CRA has recently announced that this amount will not be increased. Allowance paid by an employer Some employers will prefer to pay an allowance directly to their employees who are teleworking to cover the additional costs they incur. In this context, the employer will be able to deduct this allowance in the calculation of its taxable income, provided that it is a reasonable amount. Normally, the amount of this allowance will be treated as a taxable benefit to the employee and will have to be included in employment income for the taxation year in which the employee receives it, except in the situation covered by the exception mentioned above. Other considerations for the employer It is also important for the employer to consider the tax implications—particularly with respect to source deductions—of the location where the employee primarily works during the pandemic if it differs from the location of the employer’s establishment where they normally report for work. The CRA and the ARQ have announced relief in this respect for the 2020 taxation year. For example, the province of work will not change for employees who work from home because of the COVID-19 pandemic. The province for the purpose of calculating source deductions will continue to be the province of the normal place of work. However, if the employee performs their work in a foreign country, certain tax implications for both the employee and the employer should be considered. Lavery’s tax law team can guide you and answer your questions regarding your company’s tax compliance. Technical interpretation IT-352R2.
Artificial Intelligence and Telework: Security Measures to be Taken
Cybersecurity will generally be a significant issue for businesses in the years to come. With teleworking, cloud computing and the advent of artificial intelligence, large amounts of data are likely to fall prey to hackers attracted by the personal information or trade secrets contained therein. From a legal standpoint, businesses have a duty to take reasonable steps to protect the personal information they hold.1 Although the legal framework doesn’t always specify what such reasonable means are in terms of technology, measures appropriate for the personal information in question must nevertheless be applied. These measures must also be assessed in light of the evolution of threats to IT systems. Some jurisdictions, such as Europe, go further and require that IT solutions incorporate security measures by design.2 In the United States, with respect to medical information, there are numerous guidelines on the technical means to be adopted to ensure that such information is kept secure.3 In addition to the personal information they hold, companies may also want to protect their trade secrets. These are often invaluable and their disclosure to competitors could cause them irreparable harm. No technology is immune. In a recent publication,4 the renowned Kaspersky firm warns us of the growing risks posed by certain organized hacker groups that may want to exploit the weaknesses of Linux operating systems, despite their reputation as highly secure. Kaspersky lists a number of known vulnerabilities that can be used for ransom attacks or to gain access to privileged information. The publication echoes the warnings issued by the FBI regarding the discovery of new malware targeting Linux.5 Measures to be taken to manage the risk It is thus important to take appropriate measures to reduce these risks. We recommended in particular that business directors and officers: Adopt corporate policies that prevent the installation of unsafe software by users; Adopt policies for the regular review and updating of IT security measures; Have penetration tests and audits conducted to check system security; Ensure that at least one person in management is responsible for IT security. Should an intrusion occur, or, as a precautionary measure for businesses that collect and store sensitive personal information, consulting a lawyer specializing in personal information or trade secrets is recommended in order to fully understand the legal issues involved in such matters. See in particular: Act respecting the protection of personal information in the private sector (Quebec), s. 10, Personal Information Protection and Electronic Documents Act (Canada), s. 3. General Data Protection Regulation, art. 25. Security Rule, under the Health Insurance Portability and Accountability Act, 45 CFR Part 160, 164. https://securelist.com/an-overview-of-targeted-attacks-and-apts-on-linux/98440/ https://www.fbi.gov/news/pressrel/press-releases/nsa-and-fbi-expose-russian-previously-undisclosed-malware-drovorub-in-cybersecurity-advisory