Canada: Contractual Disputes And Dismissal: A Caveat For Personnel Placement Agencies In Québec
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The coming into force of the Regulation respecting personnel placement agencies and recruitment agencies for temporary foreign workers¹ (the "Regulation") on January 1, 2020, has caused much upheaval among Québec's personnel placement agencies.

The Regulation made under the Act respecting labour standards² (the "Act")clarifies the application of this statute to Québec personnel placement agencies and imposes new obligations on them. Among other things, section 23 of the Regulation provides that no personnel placement agency may"take measures or agree on provisions preventing or restricting the employee's hiring by the client enterprise, beyond a period of 6 months following the beginning of the assignment of an employee to a client enterprise." It should be noted that the relevant legislation in some Canadian provinces contains relatively similar restrictions.³ Furthermore, the federal government introduced similar provisions to the Canada Labour Code⁴ with Bill C-86,⁵ which are not yet in force.

When this provision in the Québec Regulation came into force, it was immediately met with strong criticism for its lack of clarity. In a recent decision (available in French only), the Administrative Labour Tribunal held that a clear clause charging fees to an employee hired by a client enterprise is contrary to the Regulation, and that a dismissal combined with a claim that such a clause is illegal constitutes a reprisal within the meaning of the Act.

Facts

The employer, a company working in the construction sector that had a personnel placement agency licence, hired the complainant on April 8, 2021. The employment contract between the employer and the complainant provided that if the complainant wished to be hired by any client enterprise within the first twelve (12) months following the last interview or visit with any such client to which he was referred by the employer, the complainant would have to obtain the written consent of the employer or pay ten thousand dollars ($10,000.00) to the employer for breach of the employment contract.

Within days of being hired, the complainant was assigned as a machinist at a client enterprise. Once assigned to this position, the complainant quickly developed close ties with the client enterprise's staff. He was told the employer would take steps to buyout his contract and formally integrate him into the team.

However, after verification, the client enterprise told the complainant that the buyout costs were too high and that it would not be possible to move forward. In the days following this discussion, the relationship between the complainant and his employer deteriorated to the point where the complainant questioned the agency about the legality of their employment contract. During this conversation, the employer told him that he no longer worked for him. When the complainant tried to access the client enterprise's site, he was denied entry due to his dismissal by the agency employing him.

The Decision

Following his dismissal, the complainant filed a complaint under section 122 of the Act, alleging that he had been the subject of reprisals as a result of his claim regarding the legality of his employment contract. Conversely, the employer claimed that the complainant was dismissed because of his attitude and behaviour.

It should be recalled that an employee who has filed such a complaint has the burden of proving that they were exercising a statutory right and that they were subjected to conduct connected to the exercise of that right in order to benefit from the presumption that the measure was a reprisal against that employee. To rebut this presumption, the employer must then prove that its conduct was motivated by other good and sufficient reasons, rather than to supposedly circumvent the right being exercised by the employee.

In this case, the Administrative Labour Tribunal noted that the employer was clearly acting as a personnel placement agency, and was in fact charging that particular client enterprise in that capacity. The Regulation therefore applied to the employer and, in the Tribunal's view, the complainant clearly tried to exercise his right to reject any attempts by the employer to prevent or restrict his right to be hired by a client enterprise beyond a period of six (6) months, and the exercising of such right was connected to his dismissal. The Tribunal found that the grounds raised by the employer to rebut this presumption were inherently linked to a prohibited ground, namely the illegal clause in the employment contract.

As a result, the Tribunal allowed the complaint, ordered the complainant to be reinstated in his employment, and ordered the employer to pay the wage loss incurred between the date of the complaint and the date of the decision, representing over thirty-two (32) months. The employer has requested a review of the decision. It will be interesting to see how this case progresses.

Key Takeaways

In this case, the Tribunal noted that a contractual claim made by an agency employee with respect to the prohibition against restricting his hiring beyond a period of six (6) months may result in the application of section 122 of the Act as well as the reinstatement of a dismissed employee in his position and payment of the losses arising from termination.

However, current case law does not clarify the meaning of what constitutes a hiring restriction, as the Tribunal's decision in this case only established that the clause used by the employer was clearly illegal. It is therefore advisable for any personnel placement agency operating under provincial or federal jurisdiction to have a legal professional review its contract to validate the legality of the clauses, and to avoid exposing itself to risks including, without limitation, the risk that a complaint with regard to a prohibited practice will be allowed due to the assertion of a statutory right.

Footnotes

1. CQLR c N-1.1, r 0.1.

2. CQLR c N-1.1.

2. See e.g.: Employment Standards Act, 2000, SO 2000, c 41, s 74.8.

4. RSC 1985, c L-2.

5. See Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, s 461.

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