Vicarious Liability – The Fallout from Festive Staff Parties

Nov 2, 2018

With the legalization of cannabis behind us and holiday parties on the horizon, one question on employers’ minds is how to deal with cannabis use at staff parties.

Vicarious Liability

Employees need to be mindful of the doctrine of vicarious liability whereby employers are ultimately responsible for the actions and omissions of their employees in the course of employment. Liability is imposed to the employer not on the basis of the fault of the employer, but on the ground that as the person responsible for the activity or enterprise in question, the employer should be held responsible for loss to third parties that result from the activity or enterprise.

To take an example from the most similar context, when it comes to alcohol use at company-sponsored events, the courts have clarified that due to the nature of the employer-employee relationship, the standard of care imposed on an employer is higher than that imposed on a tavern owner.

In addition to their duty to maintain a safe workplace under the Occupational Health and Safety Act, employers who provide alcohol at a company-sponsored event are obligated to monitor the amount of alcohol consumed by employees; and take positive steps to prevent an employee from driving home after drinking. Such steps include: demanding the employee for their car keys, paying for a cab to send the employee home safely, calling the police, calling a contact to come and take the employee home, or physically stopping the employee from hurting themselves or others.

Where employees drive while intoxicated and subsequently get into a serious car accident after leaving a workplace event where alcohol was served, employers may be found vicariously liable for the actions of their employees.

How Does This Apply to Cannabis?

The legalization of cannabis further complicates matters. As stigma around cannabis use decreases, it is not out of the question to picture employees consuming cannabis at a Company-sponsored event, such as a staff holiday party.

One way to deal with this potential problem is through a Company policy. The use of alcohol, cannabis and drugs at Company-sponsored events can be addressed in a drug and alcohol policy. If the nature of your industry involves requiring employees to attend many events in which they represent the Company, whether the events are sponsored by the Company or not, an employer may want to consider having a separate policy on events.

One question I’ve been asked often from beleaguered employers is: even if we address cannabis use in a policy, how can we justify treating cannabis any differently than alcohol now that cannabis is legal? Although this area of law is still developing and we will have to wait and see how the doctrine of vicarious liability evolves with the legalization of cannabis, one main difference between the two substances is their availability to the general public and the systems in place behind distribution and service. An employer serving alcohol at a party would be prudent to do so through a licensed distributor (such as a restaurant or bar), or through people that are licensed and certified to serve alcohol. The reality is that these systems are not (legally) in place for cannabis consumption, and there is, therefore, no way to monitor consumption and ensure your employees’ safety. In other words, there is no such thing as a “cannabis server” or a  “Smart-Serve” certificate for cannabis distribution. Until such time, an employer may be able to justify making a distinction between alcohol and cannabis at a holiday party.

However, although an employer may have eyes and ears at the Company-sponsored function itself, an employee could always find a way to consume cannabis and escape the employer’s detection. For this reason, it is more important for an employer to focus on identifying impairment and circumstances where an employee may need an employer’s intervention to prevent them from driving while impaired, than to focus on identifying (and prohibiting) the source of the impairment.

There are many ways to attack the termination clause in an employment contract. 

I am now surprised if employee counsel does not claim that their client’s  termination clause is not legally enforceable - usually because the termination clause does not allegedly comply with the Employment Standards Act.

This blog considers a case, McKercher v Stantec Architecture Ltd., 2019 SKQB 100, where an employee successfully attacked the termination clause in his contract because he did not explicitly agree to it after being promoted. 

The Facts

In 2006, Mr. McKercher commenced employment as a staff architect. The termination clause in his employment contract stated: 

Termination other than for cause will be with notice or pay in lieu of notice, based on your length of service. If the Employer terminates your employment for other than just cause you will receive the greater of:

  1. a)   Two weeks notice or pay in lieu of notice during the first two years of employment increasing by one week for each additional completed year of employment to a maximum of three months notice or pay in lieu of notice.

      or

  1. b)   The minimum notice of termination (or pay in lieu of notice) required by applicable statutes.

Eleven years later, when Mr. McKercher was employed as a Business Centre Sector Leader, his employment was terminated. The employer paid him the three months termination pay he was owed under his employment contract.

 

Another way to attack a termination clause: What is the changed substratum doctrine?

An Ontario judge in a 2012 case, MacGregor v National Home Services, 2012 ONSC 2042 (CanLII), described this legal doctrine as follows: "The changed substratum doctrine … provides that if an employee enters into an employment contract that specifies the notice period for a dismissal, the contractual notice period is not enforceable if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed."

 

The rationale for this doctrine has been described by one judge, Schmidt v AMEC Earth & Environmental Ltd., 2004 BSCS 2012 (CanLII), as follows: "In my view, it was incumbent on the defendants to advise Mr. Schmidt that they intended to continue to rely upon the termination provision set out in the Agreement when substantial changes in his employment occurred. This would have allowed him to consider the matter and to negotiate for other terms. If the defendants wished to continue to rely on the termination provisions there ought to have been a ratification of the provisions as the nature of Mr. Schmidt’s employment changed."

 

Decision

The judge hearing this case relied on the following factors when deciding not to enforce the termination clause in the employment contract: ”...there is no evidence that (the employer) made it clear to the (employee) that the notice of termination provisions were intended to apply to the positions to which he was promoted. The employment agreement contains no express wording to this effect, nor does it contain any wording to support the inference of such an intent. Further, and in keeping with the analysis in Schmidt, the Court received no evidence that, as it promoted the plaintiff, SAL reasserted its understanding and expectation that the notice of termination limit would remain in effect.”

 

Lesson to be learned:

An employer should make it clear that the termination clause in an employment contract applies when an employee is promoted. This expression of this intent should be in writing and should be clear and unambiguous. I recommend that an organization’s employment be reviewed by an employment lawyer every year or two. If your employment contract does not address this issue then think about doing so the next time it is reviewed.

 

For 30 years, Doug MacLeod of   the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

k

Recent Posts

Toronto Office

702 - 2 Bloor Street West,
Toronto, ON M4W 3E2

Barrie Office

277 - 92 Caplan Avenue,
Barrie, ON L4N 9J2

Collingwood Office

220 - 1 First Street
Collingwood, ON
L9Y 1A1

Contact

Phone

+1 (888) 640-1728

Fax

(866) 883-8445

Email

[email protected]

Toronto Office

702 - 2 Bloor Street West, Toronto ON M4W 3E2

Barrie Office

277 - 92 Caplan Avenue, Barrie ON L4N 9J2

Collingwood Office

220 - 1 First Street, Collingwood, ON L9Y 1A1

Translate

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!