E- Newsletter - Fall 2007

1. What's New:  IOC on Harassment in Sport, Changes to OHRC, Supreme Court on Negligence
2. Tips for Sport Leaders: Check out your knowledge with the Employment Quiz!
3. Recent Sport Law Cases/Decisions: Ceccol v. Ontario Gymnastics Federation (2001), the case for reasonable notice.
4. Feature Article: So You Want To Be a Contractor?

IOC Consensus Statement on Sexual Harassment and Abuse in Sport

On 8 February 2007, the IOC Executive Board adopted a Consensus Statement on Sexual Harassment and Abuse in Sport. The document flows out of an October 2006 conference on the topic convened by the IOC Medical Commission. At this conference leading sports psychologists, sociologists, psychiatrists and policy experts from around the world reviewed literature and best practices to produce the Consensus Statement.

While the contents and policy prescriptions of the statement might be familiar to Canadian sport leaders, who have worked on this issue for over a decade, this Consensus Statement is nonetheless very significant. When the IOC speaks, the sport world listens. Existing policy frameworks in Canada already largely comply with the Statement, but could be improved with the addition of references to hazing (defined by the IOC as ‘abusive initiation rituals that often have sexual components and in which newcomers are targeted’) and homophobia (‘a form of prejudice and discrimination ranging from passive resentment to active victimization of lesbian, gay, bisexual and transgendered people’).

The Centre for Sport and Law wishes to acknowledge the contribution of several Canadians to this work: Panel Member Margo Mountjoy of Guelph, and participants Margery Holman of Windsor, Sheldon Kennedy of Calgary and Sandra Kirby of Winnipeg. 

For a full copy of the Consensus Statement on Harassment and Abuse in Sport, click here.

Changes to Ontario Human Rights Act

On 20 December 2006, the revisions to the Ontario Human Rights Act came into effect (Human Rights Code Amendment Act, 2006). In the past, the Ontario Human Rights Commission engaged in investigations, among other matters, and acted as a sort of gatekeeper for complaints going forward to hearings before the Ontario Human Rights Tribunal. A fundamental change is that now complainants file directly with the Tribunal. The time of the long drawn-out investigation is a thing of the past. Rather than waiting out months or years for the Commission to work through investigations, respondents to new complaints will find that they have to be ready to move quickly.

The legislation also does away with the screening process for frivolous and bad faith complaints without an oral hearing. According to one expert ‘Employers will need to be more proactive in investigating complaints [in their own workplace] and there is an enhanced need to have good human rights policies in place... Employers will also need good practices to ensure that their policies are known and implemented...’ (Brian Smeenk, McCarthy Tetrault, LLP).

Supreme Court of Canada find no link established between the defendant’s conduct and injury

The Supreme Court of Canada recently ruled in the case of Resurfice Corp. v Hanke (2007 SCC 7) and shed new light on one of the four elements of negligence. Ralph Hanke operated an ice-resurfacing machine at an Edmonton rink, and was horribly injured when an explosion occurred, after Hanke put water into the gas tank. He claimed that the water tank and gas tank were too close together and looked too much alike, and that the manufacturer and distributor of the machine should be held liable for his injuries.

The Appeal Court in Alberta had ruled in Hanke’s favour, considering in part the seriousness of his injuries and the relative financial positions of the parties. The Supreme Court, on the other hand, properly interpreted the ‘but-for’ test, which is used to determine whether there is a causal connection between a defendant party’s conduct and a plaintiff’s injuries. In this case, Hanke was an experienced operator, knew the difference between the two tanks, knew not to put water into the gas tank, and the gas tank was clearly marked ‘gasoline only’. The ‘but-for’ test did not establish that the defendant’s negligent act or omission caused, or substantially contributed to Hanke’s injuries.

The Supreme Court concluded ‘Foreseeability depends on what a reasonable person would anticipate, not on the seriousness of the plaintiff’s injuries or the depth of the defendant’s pockets’. Ultimately, Hanke’s own conduct was found to be the cause of his tragic misfortune.

Focus on Employment Issues

Workplace Law Quiz 

Are you up to speed on employment law issues in your workplace?  Take this quiz to test your knowledge! (answers at end of document)

1. An employment contract for an indefinite term provides notice periods for termination that match the statutory minimum in employment standards legislation but no more. Is the contract enforceable?

2. An Executive Director (ED) of a provincial sport organization has used a series of one-year fixed-term contracts for a staff position in the office. Each year this contract is renewed for one year. After many years, the ED decides to let the contract run its course and to terminate the employee. The ED tells the employee that he is entitled to severance pay consistent with the 1-year contract. Is the ED correct?

3. A Senior Manager who has been with a sport organization for six months has been told her scope of responsibilities will change significantly in another 12 months. She is now claiming constructive dismissal. Is she correct?

4. Your PSO is about to go bankrupt. Are the employees entitled under employment standards laws to claim termination and severance pay?

5. A former employee is suing your organization for wrongful dismissal. The Board has instructed its lawyer to stonewall and stall the action as long as possible to financially exhaust and discourage the plaintiff from proceeding. Is this a sound strategy?

6. The coach of a non-profit swim club is paid an annual lump sum ‘honoraria’ of $12,000 or roughly $1,000 per month. Both the club and the coach believe the coach to be an independent contractor; however, the Canada Revenue Agency determines that the coach is actually an employee and demands that both the coach and the club pay arrears of taxes, EI and CPP contributions as well as accumulated penalties. The payments put the Club into bankruptcy. Could the Officers and Directors in their personal capacities now be on the hook for the club’s share of the payments?

See answers at end of this newsletter…

RECENT SPORT & LAW CASES/DECISIONS

Case Comment

Ceccol v. Ontario Gymnastics Federation (2001) 

A fundamental principle in employment law is that when terminating a contract without cause, an employer must give reasonable notice. This principle is not absolute however, as it does not apply to fixed-term contracts, as these contracts simply run their course and then cease. It comes as no surprise then that some employers have gotten into the habit of offering repeated fixed-term contracts as a way to limit an employee’s right to proper notice upon termination.

The Ontario Court of Appeal looked at the line between fixed and indefinite term employment contracts in the case of Ceccol v. Ontario Gymnastics Federation.  Diana Ceccol was hired on a one-year contract as the administrative director for the Ontario Gymnastics Federation (‘OGF’). At the conclusion of her first year of employment, the OGF renewed Ceccol’s fixed-term contract and after 16 successive years of renewals, the OGF terminated her employment. The contract then in effect contained a clause that limited Ceccol’s notice period to that set out in the Ontario Employment Standards Act (‘Act’). The Act provided for mere weeks of notice of termination, even for long-term employees. The OGF sought to rely on that clause to limit Ceccol’s notice period.

Ceccol sued for a longer notice period, arguing that she believed she was a full-time permanent employee. The Court agreed and relied heavily upon case law dealing with standard form contracts. The Court felt that that individuals signing standard form agreements may not fully understand the stringent and onerous conditions in such agreements (for example, what might be in the fine print), and therefore the party holding out the contract has an obligation to draw these conditions to the attention of the individual who is signing.

The Court also noted that the consequences for an employee of a finding that an employment contract is for a fixed term are serious. Employers would be able to evade the protections contained in the law by resorting to the label of ‘fixed-term contracts’ when the relationship more closely resembled a permanent contractual arrangement.

It was concluded that if the OGF wished to enforce the notice clause as outlined in Ceccol’s contract, the OGF should have drawn that clause to her attention. The Court found that Ceccol had a reasonable belief that at some point over her lengthy career she had become a ‘permanent’ employee rather than a short-term contract employee. The Court said she was entitled to consideration for her multiple years of service, and she was granted 16 months of severance (in lieu of notice), rather than the few weeks provided by the contract.  

What does the Ceccol case tell us? Employees who are repeatedly hired to consecutive contracts may, after a number of years, be entitled to consider themselves permanent employees, at least for calculating notice upon termination. 

• Employers who face situations where, due to funding or budget cycles, they are constantly renewing term contracts with their employees should consider the following in order to achieve fixed-term employment:
• Be clear and unambiguous in the wording of the contract as to when it will end.
•      Do not let the employee continue to work after the expiry date – rather, prepare a new contract and ensure that it is negotiated well in advance of the expiry of the old one.
• Keep a written record of negotiations so that, if there are any perceived differences regarding the final terms, your notes will support the intention of a fixed-term agreement.
• Specify in the contract that upon the expiry of the fixed term, the employment terminates and no severance will be owed, and that the contract itself is notice of the termination.
• Provide the employees with the opportunity to have the contract independently reviewed by a lawyer.

Ceccol v. Ontario Gymnastics Federation [1999] O.J. No. 304.

FEATURE ARTICLE

So you want to be a contractor?

Most working relationships in sport organizations are relationships of employment, governed by employment standards legislation. In some cases, however, individuals such as coaches may perform services for a sport organization under an independent contract, and these relationships are governed by contract law. There are critical distinctions between being an employee and being a contractor, and there is also a legal test to distinguish them, all of which are discussed in detail in our publication ‘A Guide to Employment Contracts for Coaches’ (http://www.sportlaw.ca/articles/other/coach_employment_guide.htm).

• For the individual who wants to be a contractor, here is a useful checklist to reinforce that relationship in the eyes of the law:
• Ensure the employer makes no statutory deductions and provides no benefits whatsoever such as health, dental, overtime, lieu days or paid vacations, etc.
• Hours of work should not be monitored.
• Be careful how the reporting/supervisory structure is designed. True contractors receive little direct supervision as they go about performing tasks.
• Structure the pay arrangement so there is some chance of profit (a commission or bonus scheme) and conversely some risk of a loss (penalty for poor results or failure to finish a task on time).
• Have all termination rights the same for both parties with no additional notice payable to the contractor if the contract is terminated.
• Where possible and sensible work away from the employer’s business. Alternatively, structure some ‘rental’ of the employer’s premises or   equipment.
• Avoid stating general duties the contractor should perform. Instead, list specific tasks the contractor is responsible to get done and the time frame in which he or she is to do them. Call this document “contractor's deliverables”, or "services to be provided" rather than “job description”.
• Avoid job titles within the organization. Avoid having business cards indicating an association with the employing organization – all these factors can be considered evidence of an employment relationship.
• Avoid language that contains employment-related terms, such as job, duties, wages, holidays, supervisor, etc.
• Keep the term of the contract as short as possible to perform the required tasks. The longer the term the more it begins to look like  an employment relationship.
• There should be no reimbursement for the contractor’s normal business expenses: these should be built into the fee paid to the contractor.
• Submit an invoice each month for payment. The payment of wages without an invoice is a clear indication of an employee relationship.
• Contractors should arrange all their own insurance at their own expense.
• Consider charging GST.

Answers To Employment Quiz:

1.Yes. The foundation for this line of thinking is set out in the 1992 Supreme Court ruling in Machtinger v. HOJ Industries Ltd., which found “an employer can readily make contracts with his or her employees which referentially incorporate by reference the minimum notice periods set out in the [Employment Standards Act] or otherwise take into account later changes to the Act or to the employees’ notice entitlement under the Act.” In one Ontario case citing Machtinger, a terminated employee who sued for wrongful dismissal and won 14 months’ severance at trial (after being offered just over 13 months by the employer), actually had his award rolled back to his contract’s original one-month compensation by the Court of Appeal.

2.No. Case law suggests that employers who repeatedly hire employees on consecutive contracts may find, after a number of years, that their employees will be deemed permanent employees. In the 2001 Ontario, appeal court case of Ceccol v. The Ontario Gymnastics Federation, the court found that the employee had a   reasonable belief that at some point over her lengthy career she had become a “permanent” employee rather than a short-term contract employee. The court said she was entitled to consideration for all her years of service in assessing a reasonable notice period. She was given 16 months of severance in lieu of notice rather than the few weeks provided for by her contract (see our Case Comment above)

3.No. While a fundamental change of job functions or responsibilities can be grounds for a constructive dismissal lawsuit, employers are free to introduce any changes with sufficient and advance reasonable notice. Generally, the courts prefer the length of that notice be greater or identical to the notice required to dismiss an employee without cause.

4.Yes. In the 1998 Supreme Court ruling in Rizzo & Rizzo Shoes Ltd. (Re), the court said the impetus behind employees’ termination is irrelevant and an employer’s bankruptcy can still give rise to an unsecured claim for termination and severance pay under employment standards legislation.

5.No. In the 1997 Supreme Court case of Wallace v. United Grain Growers Ltd., the court made it clear that bad faith conduct by employers at a time when a terminated employee is most vulnerable can lead to significant and punitive damages above the required notice period. Unlike in ordinary commercial contracts and negotiations where aggressive tactics may be used, the court held employers must attempt to “minimize the damage and dislocation (both economic and personal) that result from dismissal.”

6.Yes. Although the ‘corporate veil’ offers some protection from personal liability, directors and officers are liable under statute for unpaid wages and related costs. In the 1988 case of Moose Jaw Kinsmen Flying Fins Inc. v. Minister of National Revenue, the Court found that the club’s ownership of tools (whistles, stopwatches, and kickboards), the absence of a chance of profit or risk of loss, and the extent to which the club directed coaching activities indicated the coach was an employee. The directors were personally responsible for unpaid taxes, witholdings, penalties, interest and legal costs.

This quiz is adapted from a similar quiz published in the October 2006 issue of Canadian Lawyer magazine.

Watch for our next newsletter – Spring 2007