LEVITAN: Is that Costanza over there? What are you doing here?

GEORGE: What?

LEVITAN: Am I crazy, or didn’t you quit?

GEORGE: When?

LEVITAN: Friday.

GEORGE: Oh, what? What? That? Are you kidding? I didn’t quit. What? You took that seriously?

The Revenge is one of my favorite episodes of Seinfeld. In it, George Costanza quits his job after not being allowed to use his boss’ private washroom. After rethinking his decision over the weekend, George decides to go back to work on Monday and pretend that nothing happened. This leads to the above dialogue, it does not work out well for George, and his boss insists that he leave.

Seinfeld is a rich source of employment law related matters (see our blog on workplace romance and George’s interaction with a member of the cleaning staff). However:

• Is it, an accurate depiction of the law?
• Can an employee retract their resignation? and
• Does their employer have to accept this retraction?

Unsurprisingly, the answer to all these questions is “it depends”.

The Law

At law, a resignation is not effective unless the employee’s intentions are “clear and unequivocal”, and the employer has accepted the employee’s resignation. 

While this appears simple, in practice this rule has been expanded to mean that an employee who resigns while upset has a cooling off period, during which time they can change their mind and take back their decision to resign. Where this happens (unless, as outlined below, the employer has accepted this resignation), the employer must accept the employee’s decision and permit the employee to continue in their role.

Clear and unequivocal also means that the employee’s decision to resign cannot be contingent on anything else. For example, if an employee indicates that they will resign if their employer decides to proceed with a change to the work process, their resignation will only be valid if the employer proceeds with this change. If the employer decides not to make this change, the employee’s stated intention to resign will no longer be valid, and the employer may not proceed to end the employee’s employment, even if it wants to.

What the employer’s acceptance of the resignation must look like is not clear. Typically, an employer would accept the employee’s resignation in writing. This would outline the formalization of the end of the employee’s employment, including:

• paying their outstanding wages,
• obtaining the employer’s property while returning the employee’s property to them, and
• issuing a Record of Employment.

This may or may not be enough to finalize things – the employee may still attempt to retract the resignation, which the employer may have to accept.

If the employer refuses to accept this retraction and proceeds as if the employee has resigned, the employee may claim that the employer has in fact wrongfully dismissed them and seek their entitlement to reasonable notice at common law. To defend against this claim, the employer would have to show that the employee’s resignation was clear and unequivocal, and that the resignation had been accepted.

Where the employer has relied on the resignation by hiring for the vacant role or taking steps towards hiring (posting job advertisements or conducting interviews), such that it would cause the employer some prejudice to accept the employee’s return, the employer will be in a stronger position to reject the employee’s attempt to return to work – and defend any subsequent claim of constructive dismissal.  

Takeaways

So, did George resign and was his employer required to accept his decision to retract his resignation? The Revenge does not make clear whether George’s employer had taken any steps towards finding George’s replacement, but for the sake of argument we can assume that it had not. George quit while he was upset about his inability to access his boss’ facilities, and then returned to work as though nothing had happened. It is arguable that this was enough to constitute George indicating that he had retracted his resignation and should have at least prompted a conversation with himself and his boss (with human resources present).

As is often the case, communication is key, closely followed by documentation of that communication. Ambiguity is often the enemy of the employer in these situations.

We assist both employers and employees in all aspects of the employment relationship, and would be happy to assist you whether you are an employee whose employment has been terminated, an employer addressing a questionable resignation, or someone drafting or in receipt of an employment agreement. Feel free to check out our FAQs and contact us for advice tailored to your situation.     

The post When is a Resignation Not a Resignation? appeared first on Rudner Law – Employment Lawyers.

We’ve provided a brief overview of the proposed changes below.

Amendments to the ESA

Increased Specificity for Job Postings

The Act builds on the last set of revisions to the ESA regarding the content of job advertisements The Act revises Part III.1 of the ESA to require that a public job advertisement discloses whether the advertisement is for an existing vacancy. The Act also includes a requirement that a job advertisement include additional information that may be prescribed; that is, information required by a regulation to be disclosed.

Finally, the Act requires that the employer provide all the necessary information to the employee in Part III.1 within the time period set out in the regulation (meaning this is to be determined).

No More Doctor’s Notes for Sick Leave

Section 50 of the ESA includes a three day unpaid Sick Leave, which permits an employer to request “evidence reasonable in the circumstances” regarding an employee’s entitlement to take this leave.

The Act amends this Section of the ESA to specify that an employer may not require an employee to provide a certificate from a qualified health practitioner (including a physician, registered nurse, or psychologist) as this evidence.

The Act does not specify what will constitute this “evidence”; only that a doctor’s note is not it.

Increased Maximum Fine for Individuals

The ESA includes penalties for violating it. The ESA at Section 132 currently includes a maximum fine of $50,000.00 and up to twelve months of imprisonment for an individual. The Act amends this Section of the ESA to increase the maximum fine to $100,000.00.

Amendments to the OHSA

New Definitions – What is a Workplace and What is Harassment

The Act amends Section 1 of the OHSA to expand the definition of several terms.

The definition of “industrial establishment” is expanded to explicitly omit “an office located in a private residence”, meaning that an employee working from home is not considered to be working in an industrial establishment. This does not impact telework – see below.

The definition of “workplace harassment” is expanded to add “including virtually through the use of information and communications technology”, so that the new definition reads:

engaging in a course of vexatious comment or conduct against a worker in a workplace including virtually through the use of information and communications technology that is known or ought reasonably to be known to be unwelcome.

The definition of “workplace sexual harassment” is also expanded to include this language, so that the new definition reads:

engaging in a course of vexatious comment or conduct against a worker in a workplace including virtually through the use of information and communications technology because of sex, sexual orientation, gender identity or gender expression, where the course of comment or conduct is known or ought reasonably to be known to be unwelcome.

This expands workplace harassment and workplace sexual harassment to include harassment via electronic means; though it is arguable that harassment via this media was already a breach of the OHSA, this amendment clarifies the matter.

Telework

The Act also revises Section 3 of the OHSA, Private Residences. The OHSA currently excludes work done by the owner, occupant or servant of the owner in or about a private residence. The Act revises the OHSA to explicitly cover telework performed at an employee’s home. This is a large expansion of the areas covered by the OHSA, and a major step towards recognizing the changing dynamics of the workplace.

Mandatory Postings

The OHSA requires that an employer post the names of all Joint Health and Safety Committee members and a copy of the employer’s’ OHSA policy in a conspicuous place in the workplace. The Act amends this requirement to permit an employer to fulfill this by posting this information in a “readily accessible electronic format”.  

Takeaways

The Act updates the ESA and OHSA to a limited extent to address modern requirements and the changing workplace. The Act has only had its First Reading and has not yet received Royal Assent, meaning that it has not become law. Further, even when this receives Royal Assent, the changes it includes will not come into force until proclaimed by the Lieutenant Governor.

Despite these updates, a number of areas of the modern workplace still remain unaddressed by the covering statutes. For example, the ESA does not include a job protected leave of absence for an ill employee (beyond the three days of Sick Leave), despite this being present in other provinces’ employment statutes. Whether this will be dealt with in a future piece of legislation (likely called the Working for Workers Six/Seven/Eight Act) remains to be seen.

We will continue to monitor and provide updates on this Act and any other relevant legislation. At Rudner Law, we have experience advising both employees and employers in the interpretation and application of statutes. If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

The post Government of Ontario Introduces “Working for Workers Five Act” appeared first on Rudner Law – Employment Lawyers.

Frustration of Contract in Employment Law

In the employment context, frustration often revolves around disability – when an employee becomes disabled and unable to return to work for the foreseeable future, the contract is frustrated. When an employment contract is frustrated, the employee receives only their employment standards termination entitlements; they are not entitled to compensation pursuant to common law.

Aside from disability, we often see frustration when an employee is no longer certified to perform the work they were contracted for, such as from a change in regulatory requirements. Frustration can also occur if an employee refuses to get vaccinated, and being vaccinated is akin to a regulatory requirement. This was the case in Croke.

Croke v VuPoint Systems Ltd.

When we covered the issue of frustration and the Croke trial decision, we noted that the trial decision was a bit surprising because the Superior Court of Justice found frustration when it could have framed the matter as a dismissal for just cause.

The Court of Appeal agreed that there was frustration in this case, by way of Bell – a third party – imposing a vaccine policy on VuPoint, Croke’s employer, who subsequently implemented its own vaccine policy. Since Bell accounted for 99% of VuPoint’s business, it had no work to give Croke once he took the position that he would not get vaccinated, and claimed that the contract was frustrated. Consequently, Croke’s inability to do any work for VuPoint for the foreseeable future immediately altered the circumstances of the parties, and his continued employment became impossible.

This decision confirms that Bell’s vaccination policy was the decisive factor, rather than Croke’s decision not to get vaccinated. As such, the circumstances were outside of the control of either party and the matter was best approached from a frustration analysis.

The Upshot

While vaccine mandates are no longer a hot topic, this decision reminds us that frustration can be tricky to approach. Although frustration results in the immediate discharge of the contract, an employer who claims frustration but does not give the employee advance notice, or an opportunity to rectify their inability to work, may not be able to establish frustration later.

Whether you’re an employee or an employer, we can help you navigate frustration, and other employment law matters. As the saying goes: if you think you need an employment lawyer, you probably do!

The post Confirmed: Refusing to get Vaccinated can be Frustration of Contract appeared first on Rudner Law – Employment Lawyers.

There was just one problem – the employer did not have the evidence of the employee’s suspected wrongdoing to support this negative reference. What happened next showed the importance of a properly conducted investigation – and the consequences of not having the facts on your side.

The Facts

The plaintiff had been with the employer for twelve years and was one of the top mortgage salespeople in Toronto. In April of 2012 his employer began an investigation into his conduct after allegations surfaced that he:

• had accepted and relied on customer documentation that included fraudulent information, and
• had also accepted referrals from mortgage brokers.

The plaintiff was placed on paid suspension during the investigation, and he resigned before it was completed. The employer closed his file with the code “not eligible for rehire”.

The investigator then initiated an alert about the plaintiff’s conduct with the Bank Crime Prevention and Investigation Office of the Canadian Bankers Association (the “CBA”). This alert stated that there was “strong evidence” that the plaintiff had knowingly uttered fraudulent documents on several mortgage applications, and that he had resigned during the investigation.

The plaintiff started applying for jobs and received job offers from several major banks. In each case, the prospective employer contacted his former employer and was told that he had “submitted fraudulent documentation in support of mortgage applications”, leading to the job offer being withdrawn. The alert at the CBA was maintained for seven years, which stopped the plaintiff from finding another job in the industry. During this period the plaintiff made multiple attempts to have this alert lifted but was unsuccessful.

The plaintiff, representing himself, sued for wrongful dismissal – which he withdrew (as he had not been fired or even constructively dismissed) and replaced with a claim for defamation. 

The Decision

At trial, the employer conceded that it had defamed the plaintiff and advanced the defences of justification (truth) and qualified privilege. Qualified privilege permits a person in authority to make a statement that would otherwise be defamatory – if the statement was made without malice.

The Court reviewed the investigation, finding no wrongdoing on the plaintiff’s part had been found. Further, the investigator had ended their investigation after reviewing only one of the plaintiff’s allegedly problematic transactions. The Court rejected the employer’s defence of justification, as the employer had failed to prove the truth of its statement about the plaintiff’s supposed fraudulent behaviour. Workplace Investigation Should Have Continued

The Court found that the investigation should have continued after the plaintiff had resigned and after the plaintiff had started his claim against the employer. The Court noted that employers treat litigation as a “cloak for freezing activity”, expecting that their lawyers will resolve the matter for them. The Court stated that instead, “litigation is the time to investigate, investigate, and investigate.”

Defence of Qualified Privilege

The Court also rejected the employer’s defence of qualified privilege, finding that the employer had failed to prove that its actions were made without malice. The Court found that the employer had no reason to believe that the plaintiff had committed fraud as its initial investigation had been inconclusive and had not done any additional investigation after his resignation.

The Court held that the employer’s failure to retract the libel (the bogus alert at the CBA) in the face of its knowledge of the negative impact on the plaintiff’s employability constituted malice, which negated the defence of qualified privilege.

The Award

The Court awarded the plaintiff:

• $475,000.00 in special damages for his lost earnings following his resignation
• $175,000.00 in general and aggravated damages for the personal harm of the employer’s conduct, as well as
• $200,000.00 in punitive damages to demonstrate the need for accountability and to deter similar conduct. 

Takeaways

Truth is a complete defence to defamation. So, an employer who fires someone for cause and can support this position may advise any future employer about their reasons for firing the employee. However, the employer must do this from a position of certainty. It cannot disseminate negative comments about a former employee without a concrete basis for it.

Where an employee is suspected of misconduct, the employer should do a comprehensive investigation to determine whether its suspicions are justified. This is the case, even when the employee resigns before the completion of the investigation. Even if the employee’s departure from their employment does not become contentious and the investigation has no purpose in litigation, it can identify potential weak points in a company’s operations to address and avoid a similar situation in the future. An employer cannot simply assume that an employee’s departure brings the matter to an end- particularly where the circumstances of the end of the employee’s employment will impact the employee’s career going forward.

We assist both employers and employees in all aspects of the employment relationship, and would be happy to assist you whether you are an employee whose employment has been terminated, an employer who suspects an employee of misconduct, or someone drafting or in receipt of an employment agreement. Feel free to check out our FAQs and contact us for advice tailored to your situation.

• FAQs on Workplace Investigations for Employers
• FAQs on Workplace Investigations for Employees

The post Defamatory Reference Provided by Past Employer Leads to Damages appeared first on Rudner Law – Employment Lawyers.

The answer is not the same in every circumstance; however, in two recent cases, it was found that the employee had not resigned by accepting new employment.

The Law on Layoffs

The Employment Standards Act, 2000 (“ESA”) provides rules that are applicable to temporary layoffs, including the maximum length of a layoff. The default limit is that a layoff can be no more than 13 weeks in any period of 20 consecutive weeks.

When certain criteria are met, for example when the employer continues to pay premiums towards the employee’s benefits plan, then the layoff can last longer than the default limit, but it still must be less than 35 weeks in any period of 52 consecutive weeks.

If the layoff extends longer than the applicable limit, then it is deemed to be a dismissal, effective on the first day of the layoff.

However, the ESA does not give employers the right to unilaterally lay off employees. Under common law, if the employee does not consent and there is no agreement allowing for layoffs, a unilateral layoff constitutes constructive dismissal. As found by the Ontario Court of Appeal in Elsegood v. Cambridge Spring Service (2001) Ltd.:

At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.

Therefore, unless the employee consents to a layoff, an employer is allowed to lay off an employee only if there is a contractual term allowing them to do so. Otherwise, the employee can claim constructive dismissal against the employer.

Accepting New Employment During the Layoff

The question of whether accepting new employment during the layoff constitutes resignation was considered in the Ontario Labour Relations Board (“OLRB”) decision of Filtervac International Inc. v Brent Goldrickand in the recent Small Claims Court decision of Hurlbut v Low & Low Limited.

Filtervac

In Filtervac, the employee Mr. Goldrick was employed from March 11, 2013 until March 29, 2019 when he was placed on temporary layoff. The decision does not discuss whether the employer had a contractual right to place Mr. Goldrick on a layoff.

Approximately 12 weeks after the start of the layoff, Mr. Goldrick advised his employer that he had obtained new permanent employment. A few days later, the employer emailed Mr. Goldrick to confirm their discussion, as follows:

“As per our conversation last week, I just want to confirm that you now have permanent position.  Even though we are still very slow, we might have several new jobs in the very near future and we have to make sure that you are not planning to return.  At that point we have to look for an outside help.  So please let me know that you consider your present job permanent.”

Mr. Goldrick responded stating,

            “Yes I do consider my current position as permanent.”

Despite this correspondence, the OLRB found that Mr. Goldrick did not resign from his employment. The OLRB summarized that “in order for there to be a resignation of employment, the employee must have expressed an unequivocal intention and, through word/deed, acted upon it, also unequivocally.” Specifically, the OLRB found the following:

1. Mr. Goldrick’s email did not disclose an intention to resign;
2. The employer never asked for a resignation letter, nor was one ever provided;
3. The employer never confirmed his understanding that Mr. Goldrick had no intention to return if recalled to work; and
4. Mr. Goldrick was never recalled to work.

As the OLRB found that Mr. Goldrick never resigned, and since the layoff extended for longer than the limits prescribed by the ESA, the employer was deemed to have dismissed Mr. Goldrick.

Hurlbut

In Hurlbut, the employee Ms. Hurlbut was employed from December 17, 2018 until she was laid off on March 20, 2020. The parties consented to the layoff, and in fact it was Ms. Hurlbut who first suggested it, as she couldn’t be at work and tend to her children at the same time.

While on layoff, Ms. Hurlbut obtained new employment. After her employer learned that she had obtained new employment, she advised them that “I’ve had to take a temporary job” and that she intended to eventually return to her previous position.

The employer took the position that Ms. Hurlbut could not be employed with both companies at the same time, and that her acceptance of new employment constituted resignation of her previous position. The employer then discontinued her benefits and issued her a Record of Employment.

The Court found that legally, an employee is entitled to hold multiple jobs with multiple employers, unless the employment contract stipulates otherwise, and that Ms. Hurlbut’s acceptance of new employment did not constitute resignation.

Therefore, the Court found that Ms. Hurlbut had been dismissed, effective on the day the employer mistakenly took the position that she had resigned.

Conclusion

Both these decisions highlight that the law on layoffs, resignations and dismissals can be more complex than you might think. The parties’ rights may also depend on the terms of the employment contract. For instance, the Hurlbut case may have been decided differently if the employment contract expressly forbade the employee from accepting other employment.

If you are an employee that has been placed on layoff, or has been presented with an employment agreement that allows the employer to place you on layoff, we can help you navigate your rights.

If you are an employer that is dealing with laid off employees, we can help you ensure that you do not unwittingly dismiss employees and create unnecessary liability for your company.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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For those who want to start taking exams and doing assignments again (instead of just reliving these in recurring bad dreams years after graduation), the answer is that for most employees there is no “automatic” right to a job-protected educational leave. This contrasts with other situations that are covered by job-protected leaves established under employment standards legislation.

Types of Leave

There are two types of leaves available to employees:

• statutorily-granted leaves, and
• voluntary leaves.

Statutorily-granted leave

Statutorily-granted leaves create an automatic right to a job-protected leave which an employee can take, if they qualify for the leave.

For example, an employee eligible for parental leave has a statutory right to go on leave in accordance with the applicable statute. The employer would not be able to refuse the leave, and the employee’s job would be legally protected. However, allowing periods of leave longer than provided for by statute would be at the employer’s discretion.

Voluntary leaves

Voluntary leaves, on the other hand, are at the discretion of the employer.

Employees may request voluntary leave for any reason – not just to go back to school. It could be for time off to visit family, take an extended trip, or even for an informal sabbatical. However, in the absence of a workplace policy providing for voluntary leaves, employees must rely on the goodwill of their employer to approve any request for a voluntary leave.

Thus, although legislatures have recognized several kinds of protected leaves, educational leave is not a statutorily-granted leave. Consequently, employees do not have a statutory right to a job-protected leave while they go back to school. An employee’s ability to go on leave to pursue education, or professional development opportunities, depends on their individual employers’ policies.

Requests for Leave 101

Although there is no inherent right to educational leave, some workplaces have educational and professional development leave policies in place, such as many post-secondary institutions. In workplaces where these policies have been implemented, employees can simply apply for leave, and employers can assess the request in accordance with the policy. While policies vary from employer to employer, these types of policies would normally stipulate:

• whether the leave is paid or unpaid,
• whether it is job-protected, and
• what kind of programs qualify, on top of other considerations.

Where there is no educational and professional development leave policy in place, employees have the option of discussing the matter with their employer. As such, employees should not assume that they either must resign or abandon the educational opportunity. Though employers are not obligated to accept an employee’s request for leave, they may not want to dismiss it out of hand. Accommodating a request for leave could be mutually beneficial, as the skills the employee is looking to develop might be valuable to the employer.

As a best practice, both employers and employees should document their discussions, as well as any arrangement reached. Written documentation helps provide clarity in the event of a dispute. If an agreement is reached, there should be a clear record of the terms of the leave, including:

• its length,
• whether it will be paid or unpaid, and
• whether the employee’s position will be protected for the duration of the leave.

We recommend engaging counsel to protect your rights throughout these negotiations.

Don’t Leave It To Chance

Employees and employers can both benefit greatly from educational and professional development leave policies. Indeed, it can be strategic for employers to have these types of policies in place, since it can help them retain talent, and gain from their employees’ development, instead of losing personnel because there was no policy in place. Furthermore, this kind of policy can promote loyalty and boost morale, as employees appreciate the fact that they can pursue their development without disrupting their careers. Ultimately, these policies can be valuable sources of internal talent development.

Are you an employee who is interested in going back to school, or taking a professional development course? We can help you review your employer’s policies, understand your rights, and assist you with discussing and arranging an educational leave.

If you are an employer, we can help you approach requests for leave. We are also happy to assist you in developing educational and professional development leave policies or review your existing policies.

The post Sabbatical Leave – Still Largely for Professors appeared first on Rudner Law – Employment Lawyers.

• A single parent who needs to take time off work to care for your sick child?
• Wondering what your legal entitlements are?
• Worried about asking your employer for time off for fear of reprisal?

Well, you have come to the right place.

This blog post answers your questions.

Duty to Accommodate to Point of “Undue Hardship”

Put simply, employers are required to accommodate individuals to the point of “undue hardship” where the need for accommodation relates to a ground protected by human rights legislation, such as family status.

Undue hardship is the limit beyond which employers are not obligated to accommodate. Employers are expected to exhaust all reasonable possibilities for accommodation before they can claim undue hardship, which is a high standard to meet.

Undue hardship includes cost, health, and safety considerations. In other words, employers will not be required to risk the health and safety of others to accommodate one employee, or to put the organization on the verge of bankruptcy.

The accommodation process is a two-way street: the employee must make a request for accommodation and support it with documentation, while the employer must assess the need for accommodation, options for accommodation and their ability to accommodate the employee. That said, in some situations, an employer may have a duty to inquire where they are aware or ought to be aware of a need for accommodation.

Family Status Accommodation

The Ontario Human Rights Code (the “Code”) defines family status as “the status of being in a parent and child relationship.” In other words, the term can apply to the adult parents of young children, or alternatively the adult children of senior parents. In any event, the Code states that everyone has the right to be treated equally in employment on the basis of family status. In order to better understand the lingering debate over accommodating parental responsibilities, read our blog post: Ontario’s Human Rights Tribunal And The Lingering Debate Over Accommodating Parental Responsibilities.

Importantly, employers are only obligated to accommodate an employee’s legitimate needs, not their preferences.  Accordingly, if you are a single parent and your child is sick, the employer will, in the large majority of cases, be obligated to accommodate you up to the point of undue hardship, because it will likely be a legitimate need based on the Code-protected ground of family status, as opposed to a preference. On the other hand, let’s say you are not a single parent but always prefer to be the parent who takes time off for their sick child, even when the child’s other parent is available to assist; in that situation, an employer might reasonably assess taking time off to take care of your sick child as a preference as opposed to a legitimate need based on a Code-protected ground. In addition, the employer may ask you to support your accommodation request with reasonable supporting documentation.

Conclusion

Employers have a duty to accommodate employees up to the point of undue hardship based on an employee’s legitimate needs, not their preferences. Family status is one of the grounds protected under the Code, which includes childcare obligations.

Employers would be wise to seek legal advice from an Employment Lawyer with respect to how to handle requests for accommodation. Rejecting an accommodation request out of hand, or failing to address it properly, can prove to be costly including substantial liability, reputational harm and low employee morale. If you are an employer who needs assistance with handling requests for accommodation, we would be pleased to guide you through the process to ensure that you comply with the law and minimize potential liability.

On the other hand, employees should keep in mind that accommodation is a two-way street: employees must also participate in the accommodation process. At the same time, the law provides protections to address an employee’s family status. If your employer refuses to accommodate a legitimate request or is discriminating against you because of your family obligations, we would be happy to help you understand your rights and obligations, as well as to ensure that you get what you are entitled to.

We are Employment Lawyers who see things from both sides, as we represent both employers and employees. And as we often say, if you think you need an Employment Lawyer, you probably do!

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By now, savvy employers have had their employment agreements updated. Problem solved, right? Wrong. A recent decision from British Columbia reminds us that even the most bulletproof termination clauses can be rendered unenforceable when the termination is implemented wrongly.

Repudiation of Contract

In Klyn v Pentax Canada Inc., 2024 BCSC 372 (“Klyn”), the plaintiff was an employee with almost 16 years of service. He began working for the employer in 2001 and signed the written employment contract (the “Agreement”) in 2006. The Agreement’s Termination Clause provided that upon termination without notice, he would receive the greater of:

• the minimum requirements under BC’s Employment Standards Act, 1996; or
• four weeks of pay for each year of service prior to signing the Agreement, plus an additional four weeks.

Pursuant to the Agreement, he was owed approximately 24 weeks of post-termination pay. Upon termination in April 2022, the employer had the plaintiff sign a letter agreeing to send mitigation reports as a condition to receiving the contractual post-termination payments. In July 2022, the employer stopped making the payments. The employer did not cite a failure to send reports as a reason for stopping the payments, nor did it provide any other reason to support its decision. In fact, the plaintiff mitigated and found alternate employment in February 2023.

Consequently, the plaintiff invoked the common law doctrine of repudiation of contract to claim that the employer no longer wanted to be bound by the Agreement. Repudiation of contract refers to a breach of a sufficiently important contractual term or condition which effects a “substantial failure of performance.” Essentially, it is an assertion that the party has demonstrated a clear intention to no longer be bound by the agreement. Where repudiation occurs, the plaintiff has the right to terminate the contract and seek damages for the breach.

The Court agreed with the plaintiff and found that the employer repudiated the Agreement. The employer’s failure to keep making the requisite payments constituted a “clear unequivocal breach” of a central term of the Agreement. As a result, the plaintiff was entitled to common law reasonable notice damages. The Court awarded the plaintiff an amount of $312,095.78, representing 18 months of pay (less amounts the employer already paid), plus compensation for 78 unused vacation days.

Alleging Just Cause in Bad Faith Can Also Invalidate an Otherwise Valid Termination Clause

Wondering about other ways to invalidate a perfectly good termination clause? Asserting just cause for dismissal and refusing to pay the contractual severance amounts is a good one, as demonstrated in Humphrey v. Mene. In that case, the court held that:

I am satisfied that in the circumstances of this case outlined above, Ms. Humphrey has established on a balance of probabilities that Menē’s conduct, objectively viewed, demonstrates an intention to no longer be bound by the December 2018 Employment Agreement, thus repudiating it. The conduct which I have found includes setting her up to fail, subjecting her to a toxic workplace, embarrassing and humiliating her before co-workers and clients after her suspension, significantly exaggerating performance issues and the evidence it had in support of these at the time of termination, and alleging cause when it knew or should have known it did not have it. These are not mere technical breaches made in good faith. Menē’s conduct in this case goes to the heart of the employment relationship.

But Wait, There’s More

It is worth noting that the employer in Klyn was also ordered to pay $25,000.00 in punitive damages for its conduct at the time of termination, and post-termination. The impugned conduct included the employer’s deliberate failure to compensate the plaintiff despite understanding the Agreement, as well as trying to have the plaintiff sign an overly broad Full and Final Release which made the contractual post-termination payments appear contingent on signing it.

If you’re an employer wondering how to avoid this fate, then we are here to help. We can assist you with implementing terminations, and help you understand your post-termination obligations.

If you’re an employee we would be happy to assist you with matters ranging from reviewing your employment agreement and termination package, to navigating dismissals and helping you understand your rights.

The post Yes, We Found Another Way to Invalidate Your Termination Clause appeared first on Rudner Law – Employment Lawyers.

The Law on Termination Clauses and Fixed-Term Contracts

The law on termination clauses in employment contracts continues to evolve, and in recent years this movement has clearly been towards the side of employees, with many termination clauses now being found to be unenforceable. In most cases, when a termination clause in an employment contract is unenforceable, the employee will be entitled to reasonable notice of termination pursuant to common law, rather than being limited to the entitlements specified in the contract.

Fixed-term contracts are an exception to this rule.

When an employer:

• terminates a fixed-term employment contract without cause, and
• there is no valid termination clause,

the employer owes the employee damages equal to the amount that would have been earned under the contract for the duration of its term.

In these situations, the concept of “reasonable notice of termination” is not relevant, and the employee’s damages will depend on:

1. How much time remained in the fixed-term contract; and
2. The amount they would have received if their employment had continued to the end of the term.

If the term of the contract was near its end, these damages could be less than what the employee would have received at common law. In situations where the contract had a lengthy term remaining, these damages could be significantly more than that of common law. For instance, if there were five years remaining on the term of the contract, the employer would be on the hook for the income the employee would have received for the full five-year period.

The Kopyl Decision

In the recent Court of Appeal decision of Kopyl v. Losani Homes (1998) Ltd., the employer adopted a creative argument and attempted to apply Court decisions on termination clauses to its own benefit. The employer argued that the invalid termination clause should invalidate the fixed-term provision of the employment contract. However, the Court on the original Application as well as the Court of Appeal did not buy this argument and found that the employer could not take advantage of its defective termination clause as a way to avoid its legal obligations under its fixed-term contract.

Kim Kopyl was hired by Losani Homes (1998) Ltd. (the “Company”) on a one year fixed-term contract from July 6, 2022, to July 6, 2023. On January 9, 2023, the Company terminated the contract, with approximately six months remaining in its term.

Although the contract contained a termination clause that purported to allow the Company to terminate the contract early, there was no dispute that the termination clause contravened the Employment Standards Act, 2000(the “ESA”) and was unenforceable on that basis.

This decision is consistent with the recent trends in the law on termination clauses. The Ontario Court of Appeal’s decision of Waksdale v. Swegon North America Inc. in 2020 had a dramatic impact on the enforceability of termination clauses. Since then, there have been further Court decisions that expand the reasons why a termination clause can be found to be unenforceable.

One of the takeaways of the Waksdale decision was that all termination clauses in an employment contract are treated as one clause. If one such termination clause is invalid, that will void the other termination provisions in the contract. For instance, a “with cause” termination clause that violates the ESA will also render a “without cause” termination clause to be unenforceable, even if they are written as separate provisions in the contract.

In the Kopyl case, the Company’s lawyer tried to apply this rule to the benefit of the employer. He argued, both to the Application Judge and to the Court of Appeal, that the “fixed-term” provision of the contract was effectively another termination clause. Therefore, the argument went, if the termination clause of the contract is unenforceable, then so should the “fixed-term” provision, which would convert the fixed-term contract into one of indefinite duration and this would entitle the employee to reasonable notice of termination at common law rather than damages for the remaining term of the contract.

Both the Application Judge and the Court of Appeal disagreed with the Company’s lawyer and sided with Ms. Kopyl. They found that while the termination clause was unenforceable, this did not impact the “fixed-term” provision, and thus Ms. Kopyl was entitled to be paid her salary for the remaining six months of the contract.

Evidently, both Ms. Kopyl and the Company must have presumed that the six months remaining on the contract was longer than the period of reasonable notice that would have been awarded at common law. An additional reason why Ms. Kopyl’s lawyer argued the contract should be treated as a fixed-term contract, and the Company’s lawyer argued that it should be treated as one of indefinite duration: the issue of mitigation.

The Application proceeded on the basis that Ms. Kopyl had not made any efforts to mitigate her damages during the unexpired portion of the contract’s term. At common law, this failure to mitigate could have reduced or even eliminated the employee’s damages. In the case of a fixed-term employment contract, the employee does not have any duty to mitigate their damages when an employer ends the contract early. The Courts found that Ms. Kopyl was on a fixed-term contract, and therefore her damages were not reduced at all due to the issue of mitigation.

Conclusion

Whether you are an employer or an employee, this case demonstrates the need to seek legal advice when entering into a contract and when a contract is terminated. Fixed-term contracts can result in unexpected liability for an employer and can impact the damages that an employee can claim.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

The post Ontario Court of Appeal sides with Fixed-Term Employee appeared first on Rudner Law – Employment Lawyers.

In a recent post, we explored the decision in Dufault v the Corporation of the Township of Ignace, in which a termination clause was struck out due to wording suggesting that the employer could terminate the employee’s employment in its “sole discretion” and “at any time”. Like many clauses in the past few years, this wording was found to be invalid for breaching the minimum standards established by the Employment Standards Act, 2000 (the “ESA”).

We know by now that the decision in Dufault is not an isolated judgment; it reflects a pattern of courts highly scrutinizing termination clauses. Around the same time as the Dufault decision, another termination clause fell victim to drafting that violated the requirements of the ESA in the case of De Castro v. Arista Homes Limited.

In this case, the employee was dismissed pursuant to a termination clause which provided that upon termination without cause, she would be entitled to receive only her minimum entitlements pursuant to the ESA. The employee brought a claim for wrongful dismissal and pursued a motion for summary judgment, arguing that the clause was unenforceable due to the language of the cause provision, which read as follows:

If you are terminated for Cause or you have been guilty of wilful misconduct, disobedience, breach of Employment Agreement or wilful neglect of duty that is not trivial and has not been condoned by ARISTA, then ARISTA will be under no further obligation to provide you with pay in lieu of reasonable notice or severance pay whether under statute or common law. For the purposes of this Agreement “Cause” shall include your involvement in any act or omission which would in law permit ARISTA to, without notice or payment in lieu of notice, terminate your employment.

As the court noted, the ESA provides that an employee who has been guilty of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” is not entitled to notice/Termination Pay. However, in this case, the employer had attempted to define the circumstances in which the employee could be dismissed without notice or pay in lieu of notice much more broadly, including simply being “terminated for cause” or for “breach of Employment Agreement”.

As a result, the court found that all the termination provisions in the employee’s employment agreement were void, and she was entitled to reasonable notice at common law.

Key Takeaways

Given how closely the courts are scrutinizing termination clauses, it is crucial that these clauses are drafted precisely and in a manner which aligns with the requirements of the ESA. Employers should have their employment agreements reviewed to ensure their clauses do not contain language similar to that seen in this decision, or in other recent cases such as Dufault. As employment law is a rapidly evolving area, we strongly recommend that employers have their contracts reviewed (and updated) on a regular basis. Please contact us to discuss how we can assist you to ensure your contracts effectively protect your business.

Given these recent decisions, employees should keep in mind that even if they have an employment agreement that contains a termination clause, it may not be valid. We strongly recommend that you contact us before accepting a package on dismissal to ensure you are not leaving significant entitlements on the table.

The post Ontario Courts Continue to Strike Down Improperly Drafted Termination Clauses appeared first on Rudner Law – Employment Lawyers.

Stuart Rudner here with another Rudner Law Employment Law update. I want to talk about what happens if someone loses their job, brings a claim for severance, but turns down a job that would otherwise be seen as reasonable and how it impacts their claim. That’s exactly the case that was faced by our Ontario court in Gannon vs. Kinsdale Carriers.

Ms. Gannon was employed by Kinsdale for about 23 years when the company folded. The owners of the company went out of their way to try to find new work for all of the employees, including Ms. Gannon. However, although she was interviewed and offered the job, she chose not to accept it. She then filed a claim seeking severance of about 22 months.

The case went to trial, and one of the issues was whether the job that she was offered was comparable to the one that she had with the defendant. Ultimately, the court preferred the defendant’s evidence, basically found that it was a comparable job, and that by failing to take the job, she had failed to mitigate her damages.

And as regular readers or viewers will know, anybody who’s bringing claim for wrongful dismissal seeking severance has a duty to make reasonable efforts to look for new work. And that includes accepting a reasonable offer of new work. In this case, the court found that Ms. Gannon did not act reasonably by refusing to accept the offer of new work, which was comparable.

And as a result, she was disentitled from her common law severance entitlement. So she got her statutory entitlements because those are obligations that the employer must pay regardless of whether someone finds new work right away or chooses not to take new work. However, she lost out on the balance, which was of course, the majority of what probably would have been around 22 or 23 months of notice.

She lost out on all of that because she didn’t take this job that was reasonable for her to take. So the lesson here for employees, if you are thinking about pursuing a wrongful dismissal claim, you must show that you’ve made reasonable efforts to look for new work. And if new work is available to you, you better think long and hard before turning it down, or you might be sacrificing a significant entitlement.

For employers, the lesson is very simple. It’s been something that we’ve been saying to our clients for many, many years now. It’s in your best interests to help a former employee find new work fairly quickly. Because if you do, that will reduce your obligation to them. So we always encourage our clients to help them.

You don’t necessarily have to do what the employer did in this case and try to find them new work. Although if you can, that’s amazing. But at the very least, provide positive references, contrary to popular belief, you’re not going to be sued for some sort of misrepresentation as long as you act honestly.

So provide positive references where possible. Consider providing outplacement counseling where possible. Help the person to find new work and that might save you significant amounts of money when it comes to severance. If you have any questions about any of this, please feel free to contact us. We’re happy to work with employers and employees to help you understand your rights and ensure that you get what you’re entitled to.

That’s all for today.

The post Wrongful Dismissal Claim + Turning Down Reasonable Work = Sacrificing Severance Entitlements appeared first on Rudner Law – Employment Lawyers.

If you were wondering how our courts would find the next way to invalidate a termination clause, you can stop wondering: a recent unpublished decision of the Ontario Superior Court of Justice determined that simply saying that the employer can implement a without cause dismissal at its “sole discretion” and “at any time” is sufficient.

The Township may at its sole discretion and without cause, terminate this Agreement and the Employee’s employment thereunder at any time upon giving to the Employee written notice as follows.

This type of clause has been found to be unenforceable.

Surprised? Concerned because your contracts (like many) contain such wording? You’re not alone.

Why “sole discretion” and “at any time” are offside

In Dufault v the Corporation of the Township of Ignace, 2024 ONSC 1029 (“Dufault”), the Court found that the termination clauses in a fixed-term employment contract were invalid for breaching the Employment Standards Act, 2000 (“the ESA”). Notably, the Court agreed with the novel argument that the without cause provision violated the Act by giving the employer the ability to dismiss the employee at its “sole discretion” and “at any time”. The employer was ordered to pay the employee the balance of the contract’s term.

Interestingly, in Dufault, the Courthad already found the termination for cause provision violated the Act, in line with prior jurisprudence, so the Court did not have to address this issue. Nonetheless, the Court found that it breached the ESA by allowing the employer to dismiss the employee at any time, because the ESA prohibits dismissals at certain times. For example, the ESA prohibits dismissing an employee as a reprisal for enforcing their rights under the Act. While this argument could be seen as a reach, it is not too surprising that the Court agreed with it given recent trends.

#TrendingNow

Indeed, Dufault builds on a body of case law that trends towards finding reasons to invalidate termination clauses. This trend began with Waksdale, which holds that employment agreements must be interpreted as a whole; an invalid termination provision will render the whole termination clause unenforceable. We wrote about Waksdale in detail on our blog. Following Waksdale, employment contracts with termination clauses that lowered the standard for termination without giving any notice were made unenforceable.

Later cases built on Waksdale and looked beyond termination clauses, going on to scrutinize ancillary provisions. The Superior Court of Justice decision of Henderson v Slavkin (“Henderson”) is one such key case. In Henderson, an otherwise permissible termination clause was ruled unenforceable because the contract’s confidentiality and conflict of interest provisions stated that breach of either provision constituted grounds to terminate employment for cause, and without notice. The Court held that this breached the ESA and rendered the termination clause invalid. We wrote about the impact of this decision here.

In Dufault, we see the attack on termination clauses continue. There is a clear trend that courts are open to finding reasons to invalidate termination clauses even when there is no obvious abrogation of the ESA, such as a provision that disentitles employees from their statutory minimums.

Impact on termination clauses moving forward

Dufault is a trial decision, which means it is not binding on other courts. There are prior cases that seem to have reached different conclusions, although the termination clauses in these other cases were not identical to that in Dufault.

Everyone, both employers and employees, should review their contracts.

Even if Dufault is not followed, it is indicative of courts’ willingness to scrutinize employment contracts for any potential ESA breaches. Employment law is evolving at a rapid pace – an otherwise enforceable contract today may not be enforceable in a few months.

If you are an employer, it is critical that you have your employment agreements reviewed for any similar language, and have them updated regularly. If you are an employee and have been dismissed, the termination clause in your contract may be newly vulnerable to challenge. As always, we are available to provide you with proactive, strategic advice for your employment law needs. You can contact us here.

The post Your Termination Clause May Be Invalidated “At Any Time” appeared first on Rudner Law – Employment Lawyers.

The pandemic brought with it many employment-related developments, including the normalization of remote work and a corresponding battle between those who want to work from home and managers who want people in the office, disputes over layoffs, mask and vaccine mandates, and much more. Some of those issues remain front and centre in the workplace, while others are working their way through the courts.

Many of 2023’s important decisions show that courts remain preoccupied with fairness in the context of employment contracts and dismissals. Some memorable cases addressed the “24-month cap” on common law notice of dismissal and when it can be exceeded, while others addressed Stuart’s favourite topic: just cause for dismissal. It turns out that destroying your employer’s property, even digital property, is not advisable and can disentitle you to termination pay.

Other key takeaways include:

• Employers who did not get their employment agreements reviewed regularly paid a heavy price in 2023.
• The change of substratum doctrine still applies: in one case, an employment agreement was found to no longer apply because of the employee’s substantially changed role.
• A one sentence long outdated termination clause put the employer on the hook for a significant amount of common law notice.
• Unnecessary fixed-term employment contracts continued to hurt employers.
• The Court of Appeal affirmed that silence does not amount to consent in the context of temporary layoffs – employers risk a constructive dismissal claim when laying off employees without a clear right to do so.
• While employees continued to be favoured by the Courts, employees who breach a settlement agreement generate less sympathy.
• For all the law nerds out there, we saw Alberta recognize the new tort of harassment.

Without further ado, here is the Rudner Law summary of the top HR Law developments of 2023.

Saving Provisions Will Not Save a Bad Termination Clause

In Tan v Stostac Inc. (“Tan”), the attack on termination clauses continued. In this Ontario Superior Court of Justice case, the impugned termination clause was one sentence long, stating that the employee’s employment could be terminated without notice “for any just cause.”

As previously reported, the Waksdale decision has confirmed that a termination for cause clause that allows for summary dismissal without any notice or compensation based on the common law standard of just cause has the potential to breach the Employment Standards Act, 2000 (“ESA”). As a result, such a clause is unenforceable and will render an accompanying termination without cause clause unenforceable as well. This is true even if there is a “saving provision”.

This decision, and others like it, make it clear that the onus is on employers to draft carefully, as courts will strictly scrutinize agreements for any attempted derogation from minimum statutory requirements. This is good news for employees. For employers, it underscores the importance of having employment agreements reviewed routinely to ensure adherence to the latest case law.

Wilful Misconduct Illustrated

Waksdale and other cases focus on the difference between “just cause” at common law and “wilful misconduct” under the ESA. In the Superior Court of Ontario decision, Park v Costco (“Park”), the employer terminated the employee’s employment  for wilful misconduct, a standard that requires a level of bad conduct on behalf of the employee that goes beyond the common law standard of just cause. It is notoriously difficult to prove wilful misconduct. Indeed, a recent decision ruled that slapping a female coworker on the backside, then laughing about it with other coworkers did not amount to wilful misconduct (see Render v ThyssenKrupp). That decision had many employment lawyers scratching their heads. Park is notable because it provides a clearer picture of the type of conduct that falls within the definition of wilful misconduct.

In Park, the employee built a website for the employer’s internal usage. By all accounts, the website was a hit, but the employee felt he did not receive adequate recognition. In response, he deleted the website twice, the second time after it was put back online by the employer’s IT team. The employee then lied about deleting it even though the IT team proved otherwise. He also sent several emails to his superiors that the Court described as condescending and disrespectful, undermining their authority. The Court ruled that the employee’s conduct amounted to wilful misconduct under the ESA.

New Role, New Contract

In Celestini v Shoplogix the employee argued that his employment contract no longer applied because his role had changed substantially since he signed it. The employee relied on the change of substratum doctrine, which holds that an otherwise valid contract will no longer apply when an employee’s role changes materially compared to what they were originally engaged for. In 2023, the Court of Appeal for Ontario upheld the trial decision, which found that the employee’s responsibilities “fundamentally and substantially increased” over the years. Consequently, the terms of his contract were no longer enforceable. It is important to note that parties can contract out of the substratum doctrine by including a clause stipulating that the contract will remain in force no matter what changes occur.

Fixed Term Contracts

The notable cases involving fixed term contracts highlight the risks employers face when using these kinds of agreements. We are reminded that terminating these prematurely can result in a windfall for the employee, and a costly loss to the employer, as the employer is generally on the hook for the balance of the term, and the employee has no obligation to mitigate. The cases below underscore that these contracts should be used sparingly and carefully.

An Unsuccessful but Creative Use of Waksdale

Ontario’s Superior Court of Justice saw the employer get creative in the unpublished decision of Kopyl v Losani Homes. In this case, the employee signed a fixed term contract and was terminated early into the term; she sued for the balance of the contract. Interestingly, this was an unusual case in which the employer argued that the termination provision was unlawful and that the fixed term of the contract should also be void. Essentially, the employer tried to rely on Waksdale to void the fixed term of the contract, characterizing that as a termination provision that should be void since the contract contained a problematic early termination clause. The Court disagreed and ruled for the employee, allowing her to claim the balance of the term.

A Duty to Mitigate for Contractors, Fixed Terms Still Risky

Monterosso v Metro Freightliner Hamilton Inc. is the kind of case that had many employment lawyers asking themselves: “why?!” This decision really stresses the costly risks employers face in using fixed term contracts. Monterosso, an independent contractor, signed a fixed term contract with Metro Freightliner Hamilton Inc. The term was for 72 months and had no early termination provisions. The company terminated the contract after 7 months, and of course, Monterosso sued. The Court of Appeal upheld the judgment in Monterosso’s favour, which saw him receive an award of $552,500.00 + HST. Notably, the Court recognized that unlike employees, independent contractors have a duty to mitigate their damages when fixed term contracts are terminated. That said, the Court disagreed with the company’s argument that the contractor had failed to mitigate.

Non-Transferable Work Experience Justifies > 24 Month Notice Period

Our courts have confirmed that in the absence of exceptional circumstances, no one will be entitled to more than 24 months of notice or pay in lieu. However, we have seen a handful of exceptions in recent years.

In our Year in Review for 2022, we wrote about Currie v Nylene Canada Inc. (“Currie”), a case that saw a notice award above the “unofficial” cap of 24 months. Currie was upheld on appeal despite a conflicting decision holding that Currie’s exceptional circumstances were not enough to award greater notice than 24 months. In 2023 we saw two important decisions that affirmed Currie and awarded notice amounts greater than 24 months.

In Milwid v IBM, a 62-year-old employee was terminated after 38 years of service. He was awarded 27 months of pay in lieu of notice at trial and the Ontario Court of Appeal upheld the decision. Since Ontario courts have confirmed that 24 months is the limit on notice in the absence of exceptional circumstances, it is instructive to note that in this case, the Court recognized as exceptional the employee’s unique and highly specialized skill set, which had limited application outside of IBM, making his experience not easily transferable. The Court also found that his termination at the outset of the pandemic, as the global economy was shutting down, was also exceptional. To read more about the background of the decision at first instance, and the jurisprudential context, see our blog post titled “Expect the Unexceptional When it Comes to Reasonable Notice”.

The Court of Appeal upheld another decision awarding a notice period beyond 24 months in Lynch v Avaya Canada. In this case, the notice award was for 30 months for a non-managerial employee with 38.5 years of service who was 64 years old. The employer appealed and argued that the motion judge erred by not specifying which factors were relied on as exceptional. The Court rejected the argument and stated that it is not necessary to specify as they were easy to discern. Nonetheless, the Court noted that the employee was a key member of Avaya, where he developed highly specialized skills working exclusively with Avaya hardware, making his experience untransferable. The Court also took notice of the fact that there were few opportunities for comparable employment in Belleville, despite there being many in Toronto or Ottawa. Given the employee’s age, it was unreasonable to expect him to move to look for alternative employment.

The takeaway from these two decisions is that while 24 months is the cap, courts will award more for long-service employees where they are seen as having developed a non-transferable skill set during their lengthy tenure.

Moral Damages Ordered for Bad Faith Termination

The Superior Court of Justice ordered the employer in Teljeur v Aurora Hotel Group to pay $15,000 in moral damages for bad faith conduct in the manner of dismissal. This case has a unique wrinkle in that the employee surreptitiously recorded the termination meeting. At that meeting, the employer promised to give written notice of termination, and promised a certain amount of severance pay. Despite several follow ups from the employee, the employer never gave written notice and paid a lower amount of severance pay than stated at the meeting. The employer also refused to reimburse the employee for various expenses he incurred, delayed paying out his ESA termination pay, and mislabeled his Record of Employment, delaying his Employment Insurance benefits. The employer also previously encouraged the employee to resign. This conduct caused the employee mental and financial distress.

When Asset Purchases Don’t Interrupt Employment

In Manthadi v ASCO Manufacturing, ASCO bought the assets of the vendor employer. Manthadi, who had been employed since 1981, signed a release with the vendor in exchange for her termination entitlements, and was then hired by ASCO. Six weeks later, ASCO laid her off and she sued for wrongful dismissal. The Superior Court found that ASCO bought the business as a going concern, because it continued to operate the business without interruption, and Manthadi’s terms of employment remained the same. Consequently, ASCO was actually a successor employee, inheriting Manthadi’s length of service, and liability for any entitlements upon termination. The Court awarded her 12 months of notice despite only working at ASCO for 6 weeks.

This case is a warning to potential buyers. Generally, in an asset purchase (unlike a share purchase) the vendor remains liable for employee-related matters unless agreed otherwise. However, when the business is purchased as a going concern, the purchaser becomes a successor employer, making it similar to a share purchase.

Employee Silence Does Not Condone a Layoff

Ontario’s Court of Appeal addressed the issue of condonation in constructive dismissal in Pham v Qualified Metal Fabricators Ltd. In this case, the employer laid off the employee in March 2020, at the outset of the pandemic. The employer’s claim that the employee condoned the layoff was successful on a motion for summary judgment. The Court of Appeal disagreed and allowed the appeal. Having found that the employer had no express or implied right to layoff the employee, the employer had to show that the employee condoned the layoff. In that regard, the Court held that condonation requires a positive act that expresses consent to the layoff; an employee’s silence does not constitute condonation.

This decision highlights the importance for employers to ensure that their employment agreements have clauses clearly expressing their right to layoff. Employees who did not agree to being laid off might have a claim for constructive dismissal.

Confidentiality Is Not Just Boilerplate

The Human Rights Tribunal of Ontario’s decision in L.C.C. v M.M. confirms that parties must abide by the terms of a settlement agreement, particularly confidentiality. M.M. was the Applicant in a workplace sex discrimination claim against her employer and a co-worker. The parties settled the claim and filed the agreement with the Tribunal. The settlement agreement included standard non-disparagement and non-disclosure clauses, the latter requiring strict confidentiality, and permitting M.M. to respond to inquiries only by stating that “the matter has been resolved.”

Shortly after the settlement, M.M. breached the confidentiality provision by posting on LinkedIn. The post stated that her workplace “sex discrimination claim” was resolved, and identified both L.C.C. and L.C., her employer and co-worker, by name. Despite requests to delete the post and honour the agreement, M.M. kept the post up. Consequently, L.C.C. and L.C. filed a contravention of settlement Application. The Tribunal ruled in favour of L.C.C. and L.C., emphasizing the reputational harm M.M. caused by disclosing the sex discrimination claim. In accordance with the breach provisions of the settlement agreement, M.M. was ordered to pay back the settlement funds.

Looking ahead: the Tort of Harassment?

It may surprise many people, but most jurisdictions in Canada don’t allow people to sue for harassment. However, we are seeing some evolution in that area, and in 2023, the Alberta Court of the King’s Bench recognized the tort of harassment. In Alberta Health Services v Johnston, a mayoral candidate engaged in conduct such as threats, insults, and other meanspirited communications directed towards Alberta Health Services and its employees. Alberta Health Services sued for defamation and tortious harassment. Without getting into the weeds of how the common law recognizes a new tort, it is important to highlight that the Court based its decision on the fact that Ontario recognizes the tort of internet harassment. The ability to sue for online harassment but not “offline” harassment is something the Court found nonsensical. Consequently, the Court took the opportunity to recognize harassment as a tort in Alberta.

Legislative Updates

We now turn to some legislative updates to be mindful of this year.

Federal

Canada Labour Code Amendments

As of February 1, 2024, important changes to the Canada Labour Code came into effect. Employees in federally regulated workplaces have greater notice requirements upon termination. Previously, after 3 months of service, employees were entitled to only 2 weeks of notice, regardless of length of service. Now, employees with 3 months to 3 years of service get 2 weeks and employees with 3 years get 3 weeks plus and one week for each additional year up to a maximum of 8 weeks. Lastly, employers must now provide terminated employees with a written statement regarding their benefits. This is to include items such as wages, vacation entitlements, benefits and bonuses, and severance. The latter requirement already exists for group terminations, so now all federally regulated workplaces must provide such a statement for individual terminations. Group termination requirements remain unchanged.

Ontario

Bill 79

Bill 79, the Working for Workers Act, 2023, received Royal Assent on October 26, 2023. Here are some key changes that came into force:

• Employees who work remotely are now included in the ESA’s mass termination provisions. When an employer terminates 50 or more employees within a 4-week period, remote workers are now considered in the count and are eligible for the same termination entitlements. Employers must also provide the terminated employees with the same Form 1 that they must provide to the Director of Employment Standards.
• The maximum fine for employers convicted of violating the Occupational Health and Safety Act has been increased from $1.5 million to $2 million.
• New licensing standards have been imposed on Temporary help agencies and recruiters. As of July 1, 2024, these types of agencies must be licensed to operate in Ontario; however, this licensing requirement is currently paused while the Government of Ontario revamps the licensing process. Knowingly using an unlicensed agency or recruiter makes a business liable for fines ranging from $15,000 to $50,000. The government has created a database of licensed temporary help agencies and recruiters for businesses to reference.

Bill 149

On November 14, 2023, Ontario introduced Bill 149, the Working for Workers Four Act. It proposes several expanded protections for employees, including:

• Pay transparency in job postings, the use of Artificial Intelligence (“AI”) and Canadian Work Experience – publicly advertised job postings are to state the expected salary range for the posted role, disclose to what extent AI is being used in selecting candidates, and a ban on requiring Canadian work experience for a given job unless permitted otherwise by law;
• Prohibition on unpaid trial periods – employers would be required to compensate employees for any work done during a trial period, as they are required to during training;
• Expanding the already strict prohibition on deducting from employee wages or tips when an employer suffers theft or other loss. For example: dine and dash or gas and dash. Bill 149 would bar employers from essentially making an employee pay when a customer does not. Ontario already takes a dim view of an employer withholding an employee’s wages – this would expand the explicit circumstances where an employer is not permitted to do so;
• Employers with tip-sharing policies would be required to post the tip-sharing policy in a visible area of the workplace, where employees are likely to see it. This would apply to workplaces where tip sharing policies exist, such as restaurants; and
• WSIB benefits would be indexed above the annual rate of inflation.

Ban on Non-Disclosure Agreements in Workplace Sexual Misconduct Settlements

Ontario announced that it would be launching consultations regarding the ban on non-disclosure agreements (“NDAs”) for workplace sexual misconduct settlements. While the ban on NDAs is not yet part of upcoming legislative changes, it would represent a significant change. If the change becomes law, perpetrators of sexual misconduct would not be able to hide their identities by using NDAs in the settlement agreements. While the purpose would be to prevent victims of sexual harassment or violence from speaking up and telling their stories, there is a concern that it could have a chilling effect on settling cases. We will continue to monitor this proposal as it continues to develop and provide further details.

Alberta

Bill 5

Significant regulatory changes might be on the horizon in 2024 for some Alberta employers. On November 1, 2023, Bill 5 passed its first reading, while the second reading was adjourned on November 21. If Bill 5 becomes law, it will rescind the existing regulatory framework for a vast swathe of public sector employers who are currently regulated by Alberta’s Reform of Agencies, Boards and Commissions Compensation Act. This includes entities such as public schools, post-secondary institutions, public agencies, and health authorities. The changes are meant to limit employers’ ability to make decisions regarding the compensation of non-unionized employees and board members. The Government of Alberta would in turn have more discretionary powers in regard to the compensation of these employees.

British Columbia

Pay Transparency Act

Employers in British Columbia will have to provide pay transparency information. The province passed a regulation under its Pay Transparency Act, which came into force on October 23, 2023, requiring employers to collect information they must include in pay transparency reports. Thankfully for employers, the program will be implemented over a number of years, giving time to understand their new obligations. The pay transparency reports employers will have to provide includes information largely relating to gender-based compensation. The goal of this initiative is to address gender-based pay disparities and discrimination.

As of November 1, 2023, employers must state a specific hourly pay or salary range in public job postings, reflecting what they expect to pay an employee in the advertised position, rather than language such as: “$15 per hour and up”.

Minimum Wage Increase

The government increased the minimum wage via an Order in Council, tying the increase to the consumer price index. As of June 1, 2023, the general minimum wage in the province increased from $15.65 to $16.75.

Good News for BC Gig Workers

On November 30, 2023, the provincial government passed Bill 48, which imposes a host of minimum standards for app-based workers who are normally considered independent contractors. The legislation aims to provide a fairer playing field for gig workers through its proposed changes. For instance, gig workers would be characterized as employees and have a minimum wage set at 120% of the provincial minimum wage for “engaged time” (time spent from the start of a delivery to the end of the task, rather than time in between tasks). The proposed changes also include termination pay and better overall compensation, although not every employment standard will be made to apply to gig workers. Notably, overtime, paid leave, vacation pay, and hours of work requirements are not part of the proposed changes.

Quebec

Minimum Working Age

The government of Quebec passed Bill 19, which modernizes the province’s child labour laws. On June 1 2023, most of its provisions came into force. Previously, there was no minimum working age for children, but there were requirements including obtaining parental consent, and a prohibition on children working during school hours. Bill 19 modernizes the provisions in the laws governing child labour by capping weekly hours of work at 17 and introducing a minimum working age of 14, with some exceptions. For example, children under 14 can work as babysitters, tutors, or camp counselors. Employers must obtain parental consent for the exceptions to apply. Employers who fail to observe these new provisions are subject to fines.

Pith & Substance

The legal developments from 2023 generally skewed in favour of employees. And 2024 has already seen a dramatic decision which will not be welcomed by employers: a judgment which invalidated a termination without cause provision which said the employer could dismiss the employee at its sole discretion[NW1] , which is fairly common contract language (spoiler alert: expect to see this case in our 2024 Year in Review).

There is no reason to think that the trend will change: courts are likely to continue to be protective of individuals, while legislatures appear focused on modernizing employment statutes to be more in line with the realities of work in the 21st century.

In such an employment law landscape, knowledge is power, and ignorance is costly – whether you are an employer or an employee, making assumptions about your rights can be very risky. Given the many developments of the past year, it is prudent to seek counsel before making any significant moves. It is also crucial that all employment agreements be drafted or reviewed by an employment lawyer; most of the ones we see are not worth the paper they are printed on.

We will continue to work with new and existing clients to help them understand their rights and obligations, so that they can be proactive. As always, we are available to help you navigate this landscape, and make strategic decisions. To paraphrase Stuart, employment law advice is both good insurance, and a good investment. 

If you think you might need an employment lawyer, you probably do!

The post 2023: Employment Law Year in Review appeared first on Rudner Law – Employment Lawyers.

• Is your company required to hire all 10 employees?
• If your company chooses not to hire some of those employees, would it be responsible for paying those employees their severance entitlements?

In most industries, there is no rule requiring new service providers to hire the employees of previous providers, and any severance obligations are the responsibility of the company that acted as the employer.  However, the Employment Standards Act, 2000 (the “ESA”) and Ontario Regulation 287/01 (“Reg 287/01”) contain special rules for employees of building services providers.

These rules apply when a building services provider is replaced by a new provider (“Newco”) and they provide rights and remedies to the employees of the replaced provider (“Oldco”). Generally speaking, and subject to certain exceptions, the following rules will apply:

1. Any employees of Oldco who are hired by Newco will have continuity of service, and their length of service with Newco will include their time with Oldco; and
2. Any employees of Oldco who are not hired by Newco will be considered to have been dismissed by Newco, and Newco will be responsible for the employee’s severance entitlements.

The Ontario Labour Relations Board described the need for these special rules as follows:

“The building services provider provisions are of significant interest to persons engaged in bidding on contracts to provide services for a building with respect to food, security, cleaning, parking, concession stands and property management. Generally, such contracts are periodically re-tendered by the building owners. Typically, when an employer loses a contract to provide such services for a building, it is left with more employees than it has work for.”

Definition of “Building Services”

The above rules apply only if the employer is providing building services. The term “building services” is defined in section 1(1) of the ESA as services for a building with respect to:

1. food,
2. security, and
3. cleaning.

Reg 287/01 adds two other categories to the definition of building services:

4. Services that are intended to relate only to the building and its occupants and visitors with respect to:
   • a parking garage or parking lot, and
   • a concession stand.
5. Property management services that are intended to relate only to the building.

Whether the services provided constitute “building services” or not is a factual determination that is made on a case-by-case basis. For example, in the decision of G.N. Johnston Equipment Co. v. Cabate, the Ontario Labour Relations Board ruled that services related to the functioning of forklift equipment used inside a building did not constitute “property management services”, and thus the new service provider did not owe any severance obligations to an employee of the previous service provider.

Continuity of Service

Section 10 of the ESA provides for continuity of service for employees of building services providers.

Let’s consider the scenario of an employee of Oldco (the former service provider). After the employee had completed six years of service, Oldco loses its building services contract to Newco (the new service provider), and Newco then hires the employee for a period of one year. Section 10 of the ESA provides that their length of service with Newco will be seven years. If Newco dismisses the employee, then their entitlements upon termination will consider their full period of service with Oldco and Newco.

Section 10 further states that if the employee will not be considered to have been dismissed by Oldco if they are hired by Newco within 13 weeks of the earlier of:

1. Their last day of work with Oldco; and
2. The day that Newco begins providing services for the building.

Obligation of New Service Providers to Existing Employees

Section 75 of the ESA concerns situations in which the new building services provider chooses not to employ an employee of the previous provider.

Consider the scenario in which Oldco loses its building services contract to Newco, and Newco hires all but one of Oldco’s employees that provided services under its contract. Section 75 of the ESA provides that Newco will be deemed to have dismissed the one employee that it did not hire, and that Newco will be responsible for employee’s entitlements upon termination, including Termination Pay and statutory Severance Pay. Newco will likely also be responsible for providing the employee with reasonable notice of termination, or pay in lieu thereof, pursuant to common law.

Reg 287/01 contains several exceptions to the application of section 75, including when an employee refuses an offer of employment with the new provider that is reasonable in the circumstances. In such a scenario, Newco will not assume liability for the termination of their employment.

Conclusion

Companies that act as building services providers need to be aware of the special rules that exist for employees in the industry. When taking over a new contract, it is advisable to obtain information about the employees of the former service providers, for which the new provider will be assuming contingent liability. We can assist employers with navigating their duties and obligations in the industry.

If you are an employee of a building services provider, we can help you enforce your rights in situations where your employment was terminated, or where you were not hired by the new provider.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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In a recent decision, the Ontario Labour Relations Board (the “Board“) determined that an employee was not entitled to notice/Termination Pay pursuant to the Employment Standards Act, 2000 (the “Act“) due to the fact that his employment had been frustrated as a result of his incarceration.

Background

In Adam West v J. Dowswell Farms Ltd. the employee was employed first as a seasonal worker and ultimately as a year-round Farm Manager. In May of 2019, he was arrested and charged with a criminal offence. He advised his employer about the arrest but did not lose any time from work as a result. On March 28, 2022, he was convicted and sentenced to 18 months in custody but was released on bail the following day pending his appeal of his conviction and sentence. The employee’s appeal was heard on December 19, 2022, and was unsuccessful. As a result, he was required to surrender to police and begin serving his sentence on January 27, 2023.

The employee advised the employer on January 26, 2023, that he would not be present at work the following day and “for an indeterminate period thereafter”. The employee’s sister engaged in further correspondence with the employer on the employee’s behalf and advised them that the employee’s sentence was for 18 months, but that he could be out in 6 months on parole.

The employer terminated the employee’s employment on January 28, 2023, for abandonment of employment. On March 4, 2023, the employee’s sister advised the employer that the employee would have a further bail hearing on March 10, 2023, and could be released pending a further appeal. The employer replied to confirm that the employee’s employment had ended, and the employer had hired a new employee to replace him. Ultimately, the employee was released on further bail on March 13, 2023.

The employee filed a claim with the Ministry of Labour alleging that the employer had failed to provide him with notice/Termination Pay in accordance with the Act. The Employment Standards Officer declined to issue an Order to Pay. The employee then pursued an application for review of that decision to the Board.

Arguments

The employee’s sole argument was that the employer was always fully aware of his circumstances, having been kept informed by his sister, and as a result had no reason to terminate his employment without notice or Termination Pay.

The employer took the position that it had terminated the employee’s employment for wilful misconduct in relation to the acts underlying the employee’s criminal conviction, which resulted in his incarceration and inability to attend work. In the alternative, the employer argued that the employee’s incarceration had rendered his continued employment impossible or frustrated the employment relationship.

Findings of the Board

In regards to the employer’s first argument, the Board noted that in a previous decision, it had specifically held that “unless the misconduct underlying the criminal conviction was directly related to the employment, the conviction and incarceration do not establish wilful misconduct under the Act.” However, the Board found that it did not need to deal with the issue of whether the employee had engaged in wilful misconduct, because the employer’s second argument that the employment relationship had been frustrated was sound.

The Board noted that “[t]he basic bargain of any employment contract is that an employee provides their labour to the employer and the employer provides compensation to the employee for their labour. Different employment relationships will have different essential requirements around how, when and where the labour by the employee is to be provided“.

In this case, the employee’s employment required his physical attendance daily at the employer’s farm. Further, the critical period in the employer’s operation occurred during the planting season, which started in April. Up until March, the employer had no reason to expect that the employee would be able to fulfil his employment obligations until July at the earliest.

In short, the Board concluded that at the time his employment was terminated, it was impossible for the employee to perform his employment duties, as he was incarcerated. Further, there was no reasonable expectation that he would be able to fulfil his employment duties for the foreseeable future, and certainly not before the start of the critical planting season. As the employment relationship had been frustrated, he was not entitled to notice/Termination Pay pursuant to the Act.

Finally, the Board noted that when an employee is unable to attend work, it is their responsibility to seek the employer’s permission to be absent, which the employee in this case had not done.

Key Takeaways

This case highlights that frustration of contract will always require a fact specific analysis. As the Board noted, every employment relationship will have different essential requirements. In this case, the fact that the employer was approaching a critical time in their business, which the employer understood the employee would not be available for, was an important factor in assessing whether the employee would be able to return to work in “the foreseeable future”.

Employers should always seek legal advice before taking the position that a contract of employment has been frustrated. In that regard, employers need to be aware that when the employment relationship is frustrated in particular circumstances, specifically due to the illness or injury of an employee, the employer will still be obligated to provide the employee with their minimum entitlements pursuant to the Act.

Employees who are advised that their employment relationship has been frustrated should speak with an employment lawyer as soon as possible, and certainly before signing any documentation related to the cessation of the employment relationship, to ensure their rights are protected.

The post Locked Up: They Won’t Let Me Out (For My Shift) appeared first on Rudner Law – Employment Lawyers.

So what was the issue? The manager’s sister, who was also the applicant’s cousin but not an employee at the time, upset the applicant by uninviting her to a birthday party.

What ensued after this? Heated email exchanges and verbal conversations regarding this issue which the applicant perceived as serious wrongdoing.

The adjudicator denied the reprisal complaint and stated:

[66] Michelle Turner also testified that any foul language used between her, and the applicant was only because they were cousins and friendly with each other. The testimony at the hearing confirmed that these three persons (applicant and her two cousins) were not communicating as fellow employees but rather as cousins. The frankness and feud in these communications can only be labelled as bickering among family members and cannot be considered as a poisoned work environment due to the fact that the text messages were not related to work, they and were exchanged outside of work, and the primary reason for this exchange of messages was because the applicant’s cousin was unable to attend the party and the applicant was uninvited from her cousin’s birthday party. (emphasis added)

The moral of the story, as (almost) always, is this: each situation will be assessed based on its particular facts and what may be considered a reprisal in one scenario may not be considered a reprisal in another scenario. Suppose the applicant and the store manager were not first cousins. Would the adjudicator have decided the case in the same way? Probably not.

That is why it’s critical to seek legal advice, whether you are an employer or an employee, before taking any steps that could impact your legal rights and entitlements. We regularly assist employers and employees in all aspects of the working relationship, including reprisals. As we always say, if you think you may need an Employment Lawyer, you probably do! You can contact us here.

The post OHRC Finds Fighting Between Co-Workers Who Are Relatives Is Not Reprisal appeared first on Rudner Law – Employment Lawyers.

Antisemitism is at an all-time high. In Toronto alone, there were 147 hate crimes targeting Jews in 2023, a number which accounts for 43% of all reported hate crimes. Toronto’s Jewish community makes up about 3.4% of the population, yet this community faces the highest amount of hate crimes per capita. Sadly, these statistics also accurately reflect the situation in Ontario and across Canada. While Canada has made a lot of progress in combating all forms of hate, the rise of antisemitic hate makes Jewish people feel unsafe, including, and perhaps especially so, in the workplace.

As employment lawyers, we are particularly concerned with the rights of employees to have a workplace that is respectful, inclusive and free of harassment and discrimination. Similarly, we are concerned about employers’ obligations to provide and maintain safe workplaces, as failing to do so exposes employers to significant reputational costs and legal liability.

What Antisemitism Looks Like

Ignorance drives the tolerance of antisemitism. Most workplaces have anti-hate policies, and rightly provide their employees with inclusivity training that tackles issues such as racism and homophobia. Unfortunately, antisemitism is routinely excluded from these initiatives, leaving people with a dearth of knowledge on what common forms of antisemitism look like. Consequently, when people think of antisemitism, they often think of the Holocaust. When that is the standard to meet, it is no surprise that people often do not know what forms day-to-day antisemitism takes. As such, acts of antisemitism in and outside of work often go unrecognized and unchallenged.

The idea that Jewish people are powerful oppressors is a key animator of everyday antisemitism – think of conspiracies about controlling global media, finance, and politics. This ancient trope has proliferated to the point where people think of antisemitism as “punching up,” making antisemitic acts go unpunished.

The oppressor trope also commonly manifests itself as anti-Zionism. Zionism is the belief that Jewish people have the right to self-determination in their indigenous land of Israel. Anti-Zionism is the belief that Jews and Israelis do not have the right to live in Israel. While commonly couched in progressive language, it is at its core a call for ethnic cleansing, if not genocide. Anti-Zionism is a rising and commonly reported form of antisemitism at work: Jewish employees are attacked and held individually responsible for the state of Israel’s supposed wrongs.

The situation becomes more concerning when we consider that about 67% of people aged 18-24 consider Jewish people to be societal oppressors. As these young people come into the workforce, it is even more imperative to address antisemitism in the workplace.

What Employees Can Do

In Ontario, under the Human Rights Code and the Occupational Health and Safety Act, employees have the right to a safe workplace free of harassment and discrimination. Antisemitic conduct, discrimination, and harassment are unacceptable and unlawful. Employees who experience antisemitism have several options,; you do not have to tolerate a toxic workplace or antisemitism in general.

Generally, we recommend documenting any instances of antisemitism, so you have a written record of any incidents. It is usually advisable to raise your complaints with your employer. Employers have a duty to properly investigate complaints and take appropriate measures to address them following the results of an investigation. If a complaint does not resolve the issue, or you have concerns regarding bias or bad faith, consider getting legal advice. A lawyer can assist you with options ranging from writing a letter requesting certain remedies, all the way to commencing a lawsuit for damages. In cases where the harassment is so severe and it is unrealistic for you to continue working in such an environment, you might have a claim against your employer for constructive dismissal. You could also have a claim against your harassers for mental distress. We recommend discussing your concerns with an employment lawyer to receive the best advice on how to proceed.

If you want legal advice, know that we take your concerns about antisemitism seriously. We will be able to assess your case and discuss how we could be of assistance.

What Employers Can Do

As outlined above, employers have a duty to provide a safe work environment free of harassment and discrimination. Failure to do so exposes employers to liability. Similarly, in the event an employee complains of antisemitism, these concerns must be taken seriously and investigated appropriately. Ideally, this means the investigation should

• be impartial,
• be thorough,
• be transparent,
• disclose the results to the employee, as well as
• outline what steps the employer will take to resolve the problem.

We recommend being proactive. There should be comprehensive workplace policies against all forms of hate, harassment, and discrimination, including antisemitism. If your policies do not mention antisemitism, it is time to update them. The definition of antisemitism should also be robust; we recommend adopting the International Holocaust Remembrance Alliance’s definition of antisemitism, which includes anti-Zionism. We also recommend providing training and education sessions on antisemitism. For example, employers host training or educational events, such as lunch and learns or webinars, during Black History Month or Pride. Approaching antisemitism in the same way will help create a more inclusive environment for Jewish employees, and will raise awareness about what antisemitism looks like, in turn helping reduce its normalization.

We would be happy to review and update your policies and practices so that they comprehensively address antisemitism and your legal obligations as an employer.

Whether you are an employee or an employer, we are here to help. If you have any questions about your situation, or would like to get legal advice, please feel free to contact us.

The post Antisemitism in the Workplace: A Primer for Employees and Employers appeared first on Rudner Law – Employment Lawyers.

A similar fact pattern was considered by the Court in the recent decision of Ratz-Cheung v. BMO Nesbitt Burns Inc. Many may be surprised to learn that in this case, the Court found that the company had not established just cause for dismissal, and that the employee in question was entitled to reasonable notice of termination pursuant to common law.

Just Cause and After-Acquired Cause

Dismissing an employee for just cause is among the most serious punishments available in employment law. If the employer can prove dismissal for just cause, then they are is able to avoid making any severance payment to that are over and above the  employee’s statutory entitlements. An employee is not even entitled to the statutory payments when they have been found guilty of:

• willful misconduct,
• disobedience, or
• willful neglect of duty that is not trivial and has not been condoned by the employer.

When assessing if there is just cause for dismissal, both the incident or misconduct in question and all relevant factors are considered. The test is to determine if the employment relationship has been irreparably harmed. Detailed information on the topic can be found in Stuart’s book, You’re Fired! Just Cause for Dismissal in Canada.

As we have written about previously , an employer can assert “after-acquired cause”, where they rely upon misconduct by the employee which occurred prior to the dismissal, but is not discovered by the employer until after the dismissal. The Ontario Court of Appeal and the Supreme Court of Canada have both held that an employer is entitled to rely on wrongdoing discovered after the dismissal as just cause for the dismissal, as long as the wrongdoing occurred before the termination.

The Ratz-Cheung Decision

A few weeks ago, the Ontario Superior Court of Justice released its decision in the case of Ratz-Cheung v. BMO Nesbitt Burns Inc. In examinations for discovery which took place 1.5 years after the employee’s dismissal, the employer BMO Nesbitt Burns Inc. (“NB”) learned for the first time that Ms. Ratz-Cheung had copied a significant amount of emails and documents containing sensitive client information. The Court stated:

In the fall of 2017, Ms. Ratz-Cheung accessed her NB Outlook e-mail account from home and asked her husband to copy the e-mails contained in three folders on a USB key.  [...]  After the e-mails were copied, she kept the USB key in her home office.  She did this as she felt that NB, and Mr. Fox in particular, were not treating her fairly with respect to the issues that she was having with her assistants, and she wanted to protect herself.

More than 4,000 e-mails and documents attached to e-mails were copied.  The e-mails included e-mails from clients that Ms. Ratz-Cheung had forwarded to her assistants.  Some of the e-mails and their attachments contained personal information of clients such as social insurance number, date of birth, description of assets, investment objectives, driver’s licence, etc.  Some e-mails included communications with clients about particular trades.

Until her examination for discovery in this action, Ms. Ratz-Cheung had never told anyone at NB that she had copied these e-mails.  During her examination for discovery held on November 26, 2019, NB became aware that Ms. Ratz-Cheung had the USB key at home.  Ms. Ratz-Cheung returned the USB key to NB in January 2020.  NB amended its Statement of Defence on June 16, 2022, to allege after-acquired cause.

The Court went on to find that Ms. Ratz-Cheung’s actions constituted:

• misconduct,
• a breach of the employer’s Code of Conduct, and
• put sensitive information at risk.

While NB was entitled to raise after-acquired cause as a defence to Ms. Ratz-Cheung’s claims, the Court ultimately found that Ms. Ratz-Cheung’s actions did not constitute just cause for dismissal. In making this finding, the Court relied on the following:

1. Ms. Ratz-Cheung did not copy documents that she was not entitled to access during her employment;
2. Ms. Ratz-Cheung did not disclose the documents or the information they contained to anyone, except for NB in the context of the litigation;
3. There was only one instance of copying, and this was not repeated behaviour;
4. The USB key containing the copied documents subsequently remained stored in Ms. Ratz-Cheung’s home office, unused and unaccessed, until the litigation;
5. Ms. Ratz-Cheung had been an employee of NB for more than 23 years, and there was no evidence of any prior breaches of the Code of Conduct; and
6. The Court found that the misconduct was a lapse in judgment on the part of Ms. Ratz-Cheung, in the context of a difficult year for her personally and in a situation where she thought that she was not being treated fairly.

In all the circumstances, the Court found that the employer had not established just cause for dismissal, and Ms. Ratz-Cheung was entitled to a notice period of 24 months.

Conclusion

This Court decision is a reminder that issues of just cause for dismissal are complex and are not always as straightforward as they may seem. A Court considering issues of just cause must determine the nature and extent of the misconduct, consider the surrounding circumstances, and decide whether dismissal is a proportional response.

If you are an employer that is considering dismissing an employee for just cause, we can help you determine the appropriate way forward. If you are an employee who was dismissed for cause, we can assist you with bringing a wrongful dismissal claim against your employer.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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What is Changing?

New Termination Requirements

As of February 1, 2024, the CLC will require that an employer who dismisses an employee on a without cause basis provide them with notice or pay in lieu of notice in accordance with a graduated system which increases based on an employee’s consecutive years of service. The new requirements are as follows:

The notice requirements will be in addition to the existing requirement to provide an employee who has completed one year of service with Severance Pay, equal to the greater of two days wages at the employee’s regular wage rate for each completed year of service, or five days wages.

New Written Statement Requirement

Federally regulated employers will now also have to provide employees with a written benefits statement no later than two weeks before the effective date of termination (or on the date of termination if the notice provided is less than two weeks). This statement must set out an employee’s:

• vacation benefits,
• wages,
• severance pay, and
• any other benefits and pay

arising from their employment with the employer as of the date of the statement.

What Do Employers and Employees Need to Do?

Federally regulated employers need to ensure they are familiar with the new requirements and comply with them for all without cause dismissals which occur on or after February 1, 2024. As we noted in our previous post, employers will also want to review their employment agreements to ensure their termination clauses do not conflict with the new minimum standards and take steps to update them as necessary. We can assist you to assess and update your current employment agreements to ensure they are enforceable and effectively protect your business.

Federally regulated employees should take note that their minimum entitlements on dismissal are increasing as of February 1, 2024. If you are dismissed (particularly after February 1, 2024), please contact us before accepting any package being offered upon termination so that we can assist you to ensure it is fair, reasonable, and reflective of your entitlements at law.

The post Reminder: Changes to the Canada Labour Code Take Effect On February 1, 2024 appeared first on Rudner Law – Employment Lawyers.

Today I want to talk about titles and why you may not want to be called a manager or a supervisor or a director, even though those titles look great on a business card. The last couple of years we’ve seen a lot of title inflation. All of a sudden people aren’t custodians, they are directors of custodial services. And sales people are no longer sales people, they’re sales managers. And the reality is these titles might seem great, and often employers use them as a bit of an incentive or a reward, or a way to convince clients or customers that the person is more experienced or has more seniority than they really do. However, some employers also use these things in order to try to deprive people of their statutory entitlements, such as overtime pay.

The reality is that every jurisdiction in Canada has legislation which provides for overtime pay, but it has exemptions. Exemptions are not based upon how you’re paid, contrary to popular belief. Even if you’re paid by salary, you’re entitled to overtime pay, unless you fall within one of the exempt categories. And the most common exempt category is a manager or a supervisor. That’s why it often pays businesses to call someone a manager and then say you’re not entitled to overtime.

So for employers, I give you this warning: just because you call someone a manager or a supervisor or a director, it doesn’t mean that they are for the purposes of overtime pay. If you look at the legislation, which differs a little bit in every jurisdiction, the key point is that they must be carrying out duties as a manager or a supervisor almost exclusively. They can occasionally do non-managerial or non-supervisory work, but if they routinely do that kind of work, they’re not exempt and they’re entitled to overtime pay. So for example, the supervisor who covers for their employee’s shifts every day and does non-managerial and non-supervisory work is entitled to overtime pay. So there’s a warning for employers that you may be breaching the employment standards legislation if you don’t give those employees overtime pay.

And a warning for employees: just because your employer says that you don’t get overtime pay because of your title doesn’t mean it’s true. You are entitled to dig a lot deeper and you may be leaving a lot of money on the table. The other way in which this becomes important is when it comes to looking at severance pay. Severance pay, in accordance with the common law, depends on a number of factors and one of them is the nature of the individual’s job. Supervisors and managers tend to get lengthier notice periods. This is a situation where the employee might use that inflated title to their advantage by saying that they were a manager, therefore entitled to more notice. Again, however, the title doesn’t matter. Courts will look beyond the title to assess the reality of what the person does on a daily basis. And if they are really not managing anyone, if they’re just managing accounts, for example, they’re not going to be considered to be a manager. Similarly, if they’re routinely doing non-managerial work, or if really the title is illusory and not reality, they’re not going to be treated like a manager.

So, for all intents and purposes, these lofty titles may sound great, but they can have legal implications that everyone should be aware of, and they should not just assume that just because someone is a manager or a supervisor, that somehow impacts their legal rights.

As everyone knows, Rudner Law works with both employers and employees, and if anyone has any questions about any of the things I’ve talked about, or thinks that they need legal advice, then please feel free to reach out to us at rudnerlaw.ca. Thanks.

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However, the 2017 Court of Appeal decision of Brake v. PJ-M2R Restaurant Inc. demonstrates that income earned during the common law notice period is not always deducted, and that there are exceptions to the general rule.

The Trial Decision

In Brake, the trial judge found that Ms. Brake was constructively dismissed from her employment as a result of a demotion imposed by the employer, and awarded a common law notice period of 20 months. During the notice period, Ms. Brake earned income from positions she obtained with three other employers, and she received employment insurance (“EI”) benefits. However, the trial judge found that none of this income should be deducted from the damages awarded to Ms. Brake.

The employer appealed the trial decision. The Court of Appeal dismissed the employer’s appeal in its entirety. The Court of Appeal’s analysis of the mitigation issue was particularly interesting and is summarized below.

The Appeal

The Court of Appeal found that in a wrongful dismissal action, an employer is generally entitled to a deduction for income earned by the dismissed employee from other sources during the common law notice period. However, in this case, the Court of Appeal agreed with the trial judge’s decision to not deduct the income that Ms. Brake earned during the notice period from the damages that were awarded to her. The Court of Appeal found that such income did not constitute “amounts received in mitigation of loss”, and therefore should not be deducted.

In analyzing this issue, the Court of Appeal looked at two different periods:

1. the period of statutory notice, and
2. the balance of the common law notice period.

The Period of Statutory Notice

The trial judge’s award of 20 months of notice included Ms. Brake’s statutory entitlement to termination pay and severance pay under the Employment Standards Act, 2000 as well as her entitlement to common law notice.

Although the Court of Appeal did not determine exactly when Ms. Brake’s statutory entitlement period ended, as there was a dispute about exactly how long her employment lasted, the Court found that the employment income she received in 2012 and 2013 was within the statutory entitlement period. Therefore, the Court reiterated the rule that statutory entitlements are not subject to mitigation, and accordingly, any employment income that Ms. Brake earned during her statutory entitlement period is not deductible as mitigation income.

The Balance of the Notice Period

The Court then analyzed the balance of the notice period. While the Court accepted that Ms. Brake earned employment income from Sobeys during that period, it found that such income was not mutually exclusive from the income she was earning from her former employer. The Court stated the following regarding that issue:

“if an employee has committed herself to full-time employment with one employer, but her employment contract permits for simultaneous employment with another employer, and the first employer terminates her without notice, any income from the second employer that she could have earned while continuing with the first is not deductible from her damages.”

The Court found that if Ms. Brake had not been constructively dismissed from her employment, she could have continued to supplement her income through part-time work at Sobeys. Therefore, her income from Sobeys did not constitute mitigation income and was not to be deducted from her damages.

In reaching this conclusion, the Court cited a decision from the Saskatchewan Court of Appeal, in which a dismissed employee taught an evening class in economics during the notice period. In that case, the Court found that the employee “could have taught this evening course if he had remained in the respondent’s employ”, and therefore did not deduct his earnings from the damages awarded to him.

The Court of Appeal’s decision in Brake has been cited in several subsequent Court decisions in support of the proposition that income earned during the notice period is not deductible from wrongful dismissal damages when such income was not mutually exclusive from the income that was earned from the former employer.

Employment Insurance Benefits

The final category of income that Ms. Brake received during the notice period was EI benefits. The Court found that the law is clear that EI benefits are not to be deducted from damages awarded for wrongful dismissal. Although Ms. Brake earned $7,150 from EI benefits during the notice period, these amounts were not to be deducted from the damages awarded against her former employer.

However, it is important to note that there may be repayment obligations of EI benefits received during the notice period, so that an employee does not earn “double recovery”.

Additional Reasons: Vastly Inferior Jobs May Not Count as Mitigation.

The trial judge gave an additional reason for declining to make a deduction on the damages owing to Ms. Brake: that her replacement employment at Home Depot was “so substantially inferior to the managerial position she held with the Defendant that the former does not diminish the loss of the latter.”

In Justice Feldman’s concurring opinion for the Court of Appeal, she endorsed the trial judge’s statement, and found that since Ms. Brake did not obtain a managerial position that was reasonably comparable to the one that she had with her former employer, then the income she earned with an “inferior” replacement employment position should not be deducted from the damages owing to her.

As Stuart previously wrote about, this is fairly controversial reasoning, and it is not clear that this reasoning will be adopted in future Court decisions.

However, the other Court of Appeal judges did not adopt Justice Feldman’s reasoning, and for different reasons still came to the same conclusion that the income should not be deducted from Ms. Brake’s damages.

Conclusion

As the Brake decision demonstrates, the damages owing to a dismissed employee are not always easy to determine. What may at first appear to be a simple exercise, may in fact involve complex legal issues that could significantly impact an employee’s entitlements.

Whether you are an employer that is a defendant in a lawsuit for wrongful dismissal, or an employee who is seeking to bring a claim against their former employer, our firm can assist you with your legal questions and strategy. If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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The new licensing requirements were introduced pursuant to the Working for Workers Act, 2021, which amended the Employment Standards Act, 2000. Essentially, the licensing regime requires that Temporary Help Agencies and Recruiters hold a license to operate in Ontario and further prohibits clients, employers, prospective employers or other recruiters from knowingly using the services of any entity operating without such a license. The penalties for non-compliance include significant fines ranging from $15,000.00-$50,000.00.

Who Needs a License?

Temporary Help Agencies

A Temporary Help Agency is defined as an employer that employs persons for the purpose of assigning them to perform work on a temporary basis for clients of the employer. If a temporary help agency is located outside of Ontario, but assigns employees to work in Ontario, the licensing requirements apply.

Recruiters

A Recruiter is any entity that, for a fee, finds or attempts to find employment (whether the employment is temporary or permanent) in Ontario for prospective employees, or finds, or attempts to find, employees (to be employed on a temporary or permanent basis) for prospective employers in Ontario. There are some exceptions, including for an employee who performs recruitment functions as a duty of their position, or an employer who engages in recruitment activities for its own organization.

When and How to Apply

Applications pursuant to the licensing regime opened on July 1, 2023, and remain open at this time. As long as an application is submitted prior to July 1, 2024, the applicant will be allowed to continue to operate while awaiting a decision from the Ministry as to whether their application is approved or refused. However, if an application is submitted on or after July 1, 2024, the applicant will be prohibited from operating as a temporary help agency or acting as a recruiter until such time as a license is issued. Applications can be submitted online with a My Ontario Account.

Licenses will need to be renewed on an annual basis.

Next Steps

Although the deadline for the licensing requirement has been extended, we recommend that any entity falling within the definition of a Temporary Help Agency or Recruiter, as set out above, begin the application process as soon as possible to allow sufficient time for any issues to be resolved and avoid any interruption in their business.

For businesses or individuals who may utilize the services of a Temporary Help Agency or Recruiter, you will want to ensure that as of July 1, 2024 the provider you are working with has complied with the licensing requirements. To help with this, the Ontario government has created a searchable database which reflects the status of applications and licenses.

If you have any questions about the new licensing requirements or need assistance submitting your application, please contact us.

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Moral Damages

Moral damages are one such category of additional damages. Moral damages can be awarded where the Court is satisfied that the manner of dismissal caused the employee mental distress that was in the contemplation of the parties. Moral damages are not awarded through an extension of the reasonable notice period, but rather through a separate award that reflects the actual damages suffered. Moral damages are distinct from aggravated damages or punitive damages, which are also awarded as separate awards, rather than through extensions of the reasonable notice period.

Teljeur v. Aurora Hotel Group

In the recent Court decision of Teljeur v. Aurora Hotel Group the Court awarded $15,000 in moral damages to a dismissed employee, as a result of the employer’s bad faith conduct.

In support of the award of moral damages, the Court cited what it found to be “a number of disturbing aspects about the plaintiff’s termination”:

1. Despite orally communicating to the employee that his employment was being terminated, no written notice of termination was ever provided to him. Providing written notice is a requirement of Section 54 of the Employment Standards Act, 2000 (the “ESA”). Moreover, the employee requested notice in writing on three separate occasions, and the employer agreed to do so. Nonetheless, no written notice was ever provided.
2. The employer did not pay the employee his statutory entitlements within the deadlines specified by the ESA. Section 11(5) of the ESA states that such payments must be made no later than the later of: (a) seven days after the employment ends; and (b) the day that would have been the employee’s next pay day. Even though the employer eventually paid these amounts to the employee, the Court cited the late payment as a factor in favour of an award of moral damages.
3. The employer failed to pay the employee the amount $16,680.03 on account of reimbursement of out-of-pocket expenses that the employee incurred on behalf of his employer prior to the termination of his employment. While the employer disputed whether interest should be charged on that amount, they had no reasonable basis to deny payment of the principal amount.
4. At the termination meeting, the employer advised that it would be paying the employee eight weeks of severance. Despite that assurance, the employer only paid the employee his ESA Termination Pay, which amounted to just three weeks.

Court Findings

The Court found that in these circumstances, the employer acted in ways that were “untruthful, misleading or unduly insensitive.” The Court thus found the manner in which the employee was dismissed constituted a breach of the employer’s duty of good faith and fair dealing. Further, the Court concluded that it would be within the reasonable contemplation of the employer that its manner of the employee dismissal would cause mental distress.

The Court has previously held that to justify an award of moral damages, there needs to be some evidence to support the mental distress suffered by the employee, but this does not necessarily need to be proven by medical evidence. In the Teljeur case, while no medical evidence was produced to document the stress suffered by the employee, the Court accepted that the employer’s actions “added significant stress to his life on top of the stress he was experiencing as a result of being terminated.”

As a result of the above factors, the Court granted the employee:

• moral damages of $15,000,
• an award of damages for wrongful dismissal, and
• damages representing the outstanding expense claim that the employer had failed to reimburse.

Conclusion

This case is a reminder that Courts will not look on employers favourably if they are seen to have committed acts of bad faith or dishonesty during termination of an employee. If you are an employer that is planning to dismiss employees, our firm can help you ensure that you comply with your legal obligations.

If you are an employee and you believe you have been treated in bad faith, our firm can help you assess whether you have a claim for additional damages against your employer, above and beyond the damages normally awarded for wrongful dismissal.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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Well, December is here now, and our collective wonder is fresh out of the oven again.

But one important thing to note about this December is that the time is not only ticking toward the deadline for 2023 – Ontario employers should also be ready to meet their compliance deadlines.

Many of these compliance deadlines are set out in different statutes. The Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”) is one such piece of legislation that employers should be aware of.

What is the AODA?

The AODA is a piece of legislation that establishes accessibility standards in Ontario and imposes accessibility deadlines based on the size and nature of the particular organization through its Integrated Accessibility Standards.

You may be wondering, what is the AODA December 31, 2023 requirement?

The AODA requires employers within Ontario with 20 or more employees to file their Accessibility Compliance Reporting Form (the “Compliance Report”) by December 31, 2023. This requirement applies every three years.

Now, this does not mean that employers with less than 20 employees do not have AODA obligations. While such employers are not required to file their Compliance Report by December 31, 2023, there are other requirements.

Employers would be wise to download the Compliance Report here in order to determine whether the organization has any compliance gaps. Employers must certify in the Compliance Report that all the required information they provided is accurate.

While employers are required to act now, they can take some time to plan how to resolve any compliance gaps over a longer period of time. Large employers in Ontario with over 50 employees should also be mindful of their obligation to develop a multi-year accessibility plan.

If you are an employer looking to meet your compliance requirements, we would be happy to assist you. We can also help employees with their employment law related needs, including but not limited to those relating to accessibility.

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While a few years ago it may have been unthinkable, we now frequently see blatant anti-Semitic conduct along with calls for violence against Jews. So, what can an employer do if one of their employees makes inappropriate comments online or participates in protests or assemblies which espouse offensive views?

Off-Duty Conduct can Lead to Dismissal

I recently recorded a series of TikTok videos in which I discussed the concept of disciplinary action arising out of off-duty conduct. This is not a new issue: I have been discussing potential employment consequences of off-duty conduct for years – see, for example, this article for Canadian HR Reporter in 2015. The quick summary, as I explain in the first video,  is that what you do on your own time is generally your own business, although the law has always provided for discipline and discipline in limited circumstances.

As set out in the 1967 decision in Re Millhaven Fibres Ltd. and Oil, Chemical and Atomic Workers I.U Loc 9-670, discipline can be imposed for off-duty conduct when:

• The employee’s conduct harms the company’s reputation or product.
• The employee’s behaviour renders the employee unable to perform their duties satisfactorily.
• The employee’s behaviour leads to refusal, reluctance, or inability of the other employees to work with him or her.

The employee is guilty of a serious breach of the Criminal Code, causing injury to the general reputation of the company and its employees, or

• The employee’s conduct makes it difficult for the employer to properly carry out its functions of efficiently managing its work and efficiently directing its workforce.

As I often explain, if the off-duty conduct impacts the employer or the employment relationship, it may warrant disciplinary action.

You Can’t Dismiss for Human Rights Grounds

The discussion above refers to dismissals for cause, in which case the employee is not entitled to notice or pay in lieu (severance). However, most employees do not have job security; as a result, they can be dismissed on a without cause basis at any time and for almost any reason, as long as they are provided with appropriate notice of compensation.

As I explain in the second TikTok video, it is unlawful for a dismissal to relate, even partially,  to a ground protected by human rights legislation, such as disability or sexual identity. However, most jurisdictions do not protect political views. In general, you can be let go if your employer does not approve of your off-duty behaviour; however, you will be entitled to severance unless the conduct rises to the level of just cause for dismissal.

“Freedom of Speech” Does Not Apply

The third of the TikTok videos addresses a common misconception that we hear every time a story breaks in which someone is dismissed for something they say (online or otherwise). Whenever that happens, we hear objections that “freedom of speech” should protect people from losing their job for something they say. As I wrote in an article entitled Freedom of speech doesn’t mean freedom from consequences:

Our charter guarantees freedom of speech, though even that is limited in certain circumstances. This guarantee means that, with certain exceptions, an individual will not be subject to criminal prosecution or conviction as a result of what they say. Of course, it has been limited by hate laws and other legislation. However, even accepting the general principle that what you say cannot be used against you, this does not apply to every context. Rather, it protects individuals from criminal prosecution. It does not mean you cannot lose your job, or be suspended from school, or suffer any adverse consequences.

Pith and Substance

It is truly disheartening to see the offensive conduct that is on display around the world. Whether it is a call to kill all the Jews or deport all the Muslims, such comments are unacceptable and can lead to the loss of one’s job.

For my recent interview in the mainstream media on this issue; click here.

The post Yes, Off-duty Conduct CAN Lead to Dismissal appeared first on Rudner Law – Employment Lawyers.

Elder v. Max Wright Real Estate

The recent Court decision in Elder v. Max Wright Real Estate outlines the legal issues of terminating an independent contractor’s fixed term contract, as well as the difficulty in calculating wrongful dismissal damages in the case of a commissioned real estate broker.

The Facts

The plaintiff Mr. Elder worked as a real estate agent for Sotheby’s Realty. He was initially hired on a one year fixed term contract, which was extended for an additional year. Sotheby’s terminated the contract with 11 months remaining on its term.

The parties agreed that Mr. Elder was a contractor rather than an employee, but disagreed on whether he was a dependent contractor, as Mr. Elder alleged, or an independent contractor, as Sotheby’s alleged. The Court ultimately found that this issue did not need to be determined, as his damages were the same in either case.

The contract between the parties contained a termination clause which allowed either party to terminate the contract “at any time with written notice to the other party”. Sotheby’s relied upon this clause to argue that it was entitled to terminate the contract without any advance notice. The Court disagreed, and found that the termination clause required Sotheby’s to provide advance notice, which in this case was the period of time remaining on the one-year term.

Six days after being dismissed from Sotheby’s, Mr. Elder obtained a new position with Engel & Volkers as a real estate agent, but argued that his earnings at his new position were less than what his earnings would have been with Sotheby for the 11 months following his dismissal.

The Law on Fixed Term Contracts

The law is clear that when a fixed term contract is terminated, the terminating party owes the non-terminating party damages equal to the amount that would have been earned under the contract for the duration of its term, unless there is a valid termination clause. The question of whether the non-terminating party has a duty to mitigate their damages will depend on whether that party was an employee or an independent contractor.

Employee-Employer Relationship

In the case of an employment relationship that is subject to a fixed term contract, the employee will not have any duty to mitigate their damages by seeking replacement employment during the remainder of the fixed term. Similarly, any income earned during the fixed term would not be deducted from the damages payable to the employee. This principle was held by the Ontario Court of Appeal in Bowes v. Goss Power Products Ltd. and Howard v. Benson Group Inc.

Independent Contractor Relationship

However, in the 2023 Court of Appeal decision of Monterosso v. Metro Freightliner Hamilton Inc., the Court clarified that the above principle does not apply in the case of an independent contractor relationship. An independent contractor who is subject to a fixed-contract will have a duty to mitigate their damages, and all income they receive during the notice period will be deducted from the damages payable to them.

The Court’s Decision

In applying the above case law, the Court in Elder v. Max Wright Real Estate determined that Mr. Elder was entitled to damages equal to what he would have earned during the 11 months remaining on the fixed term of the contract, but that such damages must be reduced by the amount Mr. Elder received from Engel & Volkers in the same period.

Calculating such damages was somewhat challenging for the Court. Pay in lieu of notice is far easier to calculate for a salaried employee, but is more difficult for a commission-based role like Mr. Elder’s. The Court was required to determine how much Mr. Elder would have earned in the next 11 months, which can be different from how much he earned in the previous 12 months. 

Each side proposed a different formula for making the calculation. Ultimately, the Court started with Mr. Elder’s average monthly earnings, and reduced this by 45% based on evidence that the real estate market had declined during that period, and that Mr. Elder’s earnings would have suffered a corresponding reduction. From that amount, the Court deducted Mr. Elder’s actual earnings from Engel & Volkers during the 11-month period, resulting in total damages of $21,034.01. In addition, the Court awarded Mr. Elder legal costs of $25,000.00, being more than the amount awarded to him as damages. While it is fairly common to use a two or three year average of earnings, it is open to either party to submit evidence of what the actual earnings would have been during the notice period.

Conclusion

Whether you are an employer or an employee, this case demonstrates the need to seek legal advice when entering into a contract and when a contract is terminated. Even if the relationship is that of an independent contractor, and even if there is a termination clause that purports to limit the required notice period, the company may face liability that it did not expect.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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Breen v Foremost Industries Ltd

Background

In 2001, Mr. Breen was appointed President and CEO of Universal Industries (Foremost) Corp. (“Universal”).

In 2003, he was appointed President of the Foremost Income Fund (“FIF”) responsible for overseeing the operations of Foremost Industries Ltd. (“FIL”), Universal and other businesses within the Foremost group of companies (the “Foremost Group”).

In 2011, Mr. Breen signed an employment agreement with FIL, which required him to comply with all the Foremost Group’s policies, practices, and procedures and to avoid and disclose any and all potential conflicts of interest. Although FIL was identified as his employer, Mr. Breen acted as President and Chief Executive Officer on behalf of the entirety of FIF, including all its related entities. He reported directly to FIF’s board of directors and was required to consult with the board and obtain approval on all matters beyond his authority, including:

• any expenditure that exceeded his spend authorization limit;
• any contract that contained “red flag” terms;
• any matter that was material and unusual or out of the ordinary; and
• compensation matters.

These requirements were frequently communicated to Mr. Breen by the board. Despite this, Mr. Breen engaged in several of these activities without board consultation or approval, including failing to obtain approval to exceed his spending limits by significant margins, entering into unauthorized agreements with third parties, failing to bring forward “out of the ordinary” events, and other misconduct. In addition, Mr. Breen knowingly accepted “gifts” and other misappropriated funds into his numbered company.

In 2014, Mr. Breen’s employment was ultimately terminated for cause.

The Claims

Mr. Breen commenced an action against FIL, and several individuals in their capacities as trustees of a wholly owned subsidiary of FIF, for wrongful dismissal.

FIF and the trustees counterclaimed against Mr. Breen, alleging that while acting in his capacity as President and Chief Executive Officer of FIF and the Foremost Group, he knowingly and willfully breached a number of duties, including his fiduciary duty, a duty of care and skill, a duty to safeguard the Foremost Group’s property, a duty to avoid conflicts of interest, and his duties of loyalty, honesty, and good faith, resulting in losses to the Foremost Group. They also alleged that Mr. Breen converted monies from the Foremost Group for his own benefit.

Findings of the Court

The Court had no hesitation in finding that FIL “was completely justified” in summarily dismissing Mr. Breen for cause. It noted that the various incidents of misconduct combined with his repeated dishonesty effectively shattered the board’s trust in him. Despite the fact that Mr. Breen clearly understood his responsibilities as a fiduciary and key employee, he knowingly breached those responsibilities. His conduct was “incompatible to the employment relationship”. Furthermore, the Court identified that the Foremost Group was entitled to have high expectations regarding the trustworthiness of its most senior officer, and that Mr. Breen had breached his duties of honesty and good faith with a view to the Foremost Group’s best interests, allowing his own self-interest to prevail.

In regard to the counterclaim, the Court found that Mr. Breen had used his position as President and CEO to collect misappropriated funds for his own benefit and that the Foremost Group was entitled to judgment against him for these amounts. However, the Court found that this was not sufficient to express it’s “disapprobation for the breaches of Mr. Breen’s statutory, contractual and fiduciary duties” and that an award of punitive damages was necessary to meet the goals of general and specific deterrence and to denounce Mr. Breen’s shameful conduct. In fact, the Court went on to note that in the circumstances, it may have been inclined to award a much higher amount for punitive damages had the employer asked for it.

Key Take-aways

As Stuart discusses in his book You’re Fired! Just Cause for Dismissal in Canada, and we explain in our FAQs and several other blog posts, just cause is a very high standard for employers to meet; however, he usually adds that “just cause is not a lost cause”. As this case demonstrates, it is not impossible to establish. Courts will look at all relevant factors when assessing whether cause has been met, including the level of trust and responsibility the employee has within the organization and their response when confronted.

In that regard, the decision in Breen v Foremost Industries Ltd demonstrates the seriousness with which courts view an employee’s breach of their fiduciary obligations. Beyond relieving an employer of what are often substantial obligations to an executive employee on dismissal, this case suggests that a breach of trust of this magnitude may even entitle an employer to substantial damage awards beyond simply provable losses stemming from the breach.

If you are an employer who believes you may have cause to terminate an employee’s employment, we encourage you to get in touch with us before you take further action so we can help you ensure your interests are protected. And if you have been dismissed with cause (or without), contact us so we can ensure that you get what you are entitled to.

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It has taken a few years for these cases to make their way through the court system:

1. first, people waited to see what would happen and if they would be reinstated,
2. then there was often negotiation with threats of litigation, and then, as we know,
3. our already backlogged courts are even more backlogged now.

Although it has taken time, our warnings are being borne out. In the latest case, a former Vice-President at Airways Transit was awarded 25 months of pay in lieu of notice plus an additional $30k for the manner in which he was treated; see Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd.

Notably, that case involved the travel industry, which was completely shut down due to the pandemic. If there was a compelling scenario for the argument that employers should not be penalized for trying to reduce costs during an unprecedented global pandemic, this was a pretty good one. However, the court did not buy that argument, and it also rejected the notion that changes to the Employment Standards Act, 2000 in Ontario, which made COVID-related layoffs immune from statutory constructive dismissal claims, impacted the common law:

The fact that a layoff may be conducted in accordance with the ESA is irrelevant to the question of whether it is a constructive dismissal at common law: see Bevilacqua v. Gracious Living Corporation, 2016 ONSC 4127 (Ont. S.C.J.), at para. 9. At common law, an employer has no right to layoff an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment and would be considered a constructive dismissal: see Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831, at para. 14; McLean v The Raywal Limited Partnership, 2011 ONSC 7330, at para. 19; and Bevilacqua, at para. 9.

Punitive Damages

The Court noted that:

1. When initially laid off, Mr. Chalmers was asked to work without pay.
2. In or about June 2020, Airways Transit had recalled several senior managers but not Mr. Chalmers.
3. Airways Transit contacted Mr. Chalmers in the months subsequent to his layoff to ask questions regarding operations, procedures, contacts and staffing matters. He was also asked to provide passwords. I find that this conduct was an obvious attempt by Airways Transit to phase Mr. Chalmers out of his role as Vice-President.
4. Mr. Chalmers followed up with Airways Transit multiple times about returning to work and Airways Transit failed to respond to his inquiries.
5. Airways Transit refused to pay Mr. Chalmers his outstanding vacation pay in contravention of the ESA.
6. Airways Transit failed to make contribution to Mr. Chalmers’ RRSP plan.
7. As of the motion hearing date, Airways Transit had not paid Mr. Chalmers his statutory entitlements pursuant to the ESA.
8. Despite attempts by Mr. Chalmers to return Airways Transit’s property, Airways Transit pled that he had failed to return said property and threatened “recovery” of damages for same.
9.  Transit’s conduct, including its silence and failure to provide relevant information in a timely manner, severely harmed Mr. Chalmers’ ability to make informed decisions concerning his employment and career.
10. By its actions, Airways Transit also failed to assist Mr. Chalmers with a new job search or to give him a letter of reference.

As a result, the Court agreed that “ Airways Transit did not satisfy its duty of good faith in its dealing with Mr. Chalmers and recalling him to work” and that this fact justified an award of punitive damages in the amount of $30,000.

Pith and Substance

Although there was much debate about whether a COVID-related layoff was a constructive dismissal back in 2020, this decision and others like it should not come as a surprise. As the court confirmed,

Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment and would be considered a constructive dismissal.

There are many similar cases making their way through the legal system, and the decisions to date do not favour employers.

While we certainly hope there will be no more pandemic-related layoffs, we do work with our employer clients to include temporary layoff clauses in their contracts. When present, such clauses allow employers to implement temporary layoffs to reduce costs, and without fear or liability, even in the absence of a pandemic.

The post Another Judge Finds that COVID-related Layoff is Constructive Dismissal appeared first on Rudner Law – Employment Lawyers.

The recent Court of Appeal decisions of Maynard v. Johnson Controls Canada LP and Nader v. University Health Network suggest that “salary” doesn’t mean base pay alone, and that the employer could be liable for other elements of compensation, including bonus payments.

Common Law vs. Contractual Entitlements

In the absence of an enforceable termination clause, an employee who is dismissed without cause will be entitled to reasonable notice of termination pursuant to common law. As a general rule, and in absence of a contract that says otherwise, the employee’s common law entitlements include compensation for:

• wages,
• salary,
• bonuses,
• benefits, and
• all other compensation they would have received during the reasonable notice period.

Common law entitlements can be displaced by a termination clause contained in an employment contract. This requires the termination clause to be enforceable, and what is legally enforceable can change over time. While termination clauses are often used to limit an employee’s entitlements, they can also be mutually beneficial by:

• avoiding uncertainty and specifying a fixed amount of notice to pay upon termination, or
• by containing a formula to easily determine these amounts.

The Court of Appeal decisions of Maynard and Nader both concern the employee’s contractual entitlements, rather than their common law entitlements, through interpreting the terms of the termination clauses contained in their employment agreements.

The Maynard Decision

In Maynard, the employment contract stated that upon termination, the employee would be entitled to his minimum statutory entitlements, and in addition, he would be provided with:

“...a lump-sum payment equivalent to 4 weeks of pay based on your salary for each completed year of service...” [emphasis added]

Based on his 14 years of service, this additional entitlement amounted to 56 weeks. The Court was tasked with determining whether this 56 weeks of pay “based on [his] salary” was limited to only the base pay, or also included his bonus and the value of his restricted share units (“RSUs”), which constituted 37% of his compensation package.

Both the lower Court and the Court of Appeal found that the contractual entitlement to 56 weeks of pay “based on your salary” in fact included the bonus and value of RSUs, and not only the base salary.

The Nader Decision

In Nader, the employment contract stated that upon termination without cause, the employee was to be provided payment “of an amount equal to 12 months salary”. The term “salary” was not defined in the contract. The Court was tasked with determining whether the payment of 12 months salary included payment of the employee’s discretionary performance-related bonus, targeted at 25% of his base salary.

The lower Court declined to award the employee any amount for the bonus, finding that there was no evidence in terms of the employee’s performance, and whether he would have been eligible for the bonus (either 25% or some lesser amount) or not.

The Court of Appeal disagreed and overturned the lower Court’s decision on the bonus. The Court of Appeal found that there was sufficient evidence about the employee’s entitlement to the bonus: namely that he was paid bonuses of approximately 25% for 2018 and 2019, and slightly less on a pro-rated basis for 2020, up to the termination of his employment.

Based on this, the Court of Appeal found that the bonus was a substantial and integral part of his overall compensation, and that it is reasonable to infer that he would have earned the bonus if his employment had continued. The fact that the bonus was “discretionary” did not change that finding.

Accordingly, the Court of Appeal ordered that the employee was entitled to not only 12 months of base salary, but an additional 25% of that amount towards his annual bonus.

Conclusion

In both the Maynard and Nader decisions, the Court of Appeal interpreted the term “salary” to include not only base salary, but other elements of the employee’s compensation as well.

These cases highlight the need to seek legal advice when entering into an employment contract. If you are an employer, our firm can assist you in preparing well drafted employment agreements, so that you are not caught by surprise when the employee claims additional entitlements that you did not expect. If you are an employee that is asked to sign an employment contract, it is critical that you seek legal advice before signing, so that you understand your rights and what you are potentially giving up.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

The post “Salary” Doesn’t Mean Only Base Pay appeared first on Rudner Law – Employment Lawyers.

You know you’re entitled to something, but how do you get it? A lawyer is expensive; even if they can get you more money, their bill may eat up everything you might get. As an alternative, The Ontario Ministry of Labour (“MOL”) has a free program where you can talk to an expert in the Employment Standards Act, 2000 (the “ESA”). They may be able to help you get your full entitlement to notice and/or severance pay. With this as an option, why would anyone go to a lawyer?

Sure, the MOL can help a dismissed employee for free. However, the maximum relief it can order is limited to the employer’s compliance with the ESA. When it is a situation where there are unpaid wages/overtime that may be enough. Conversely, in a dismissal, the MOL can only order compliance with the ESA. It cannot order any remedy under the common law, including notice and damages for bad faith or human rights breaches, all of which may be far more substantial than an employee’s ESA entitlements.

Giggly Panda Baby Spa Inc. v Breanne Norris

The case of Giggly Panda Baby Spa Inc. v Breanne Norrisis an example of what the employee gave up by proceeding via the MOL.

Facts

The employee worked for the employer from August 2020 to July 2022, and at her request, was never scheduled to work Fridays.

July 1, 2022, was a public holiday and a Friday, and the employer was understaffed that day. The employer asked the employee if she would work on the holiday. The employee confirmed she would – if she received double pay for the day. The employer refused.

On the employee’s first day of work after the holiday, July 5, 2022, her manager escorted her into a small room and confronted her for “having tried to extort him” regarding July 1. The employee was so alarmed by this that she filed a workplace harassment complaint with the MOL. An inspector attended the workplace the next day and prepared an inconclusive report.

On July 7 the employer issued a written warning to the employee, alleging that she had engaged in “Blackmailing the owner to cover a shift by asking double pay time after knowing there’s no one to cover the shift.” The employee refused to sign the warning.

The employer then dismissed the employee on the same day, issuing a termination letter stating that the basis for the dismissal was:

“Blackmailing the business by Text Message to cover a shift, by asking double pay time after knowing there’s no one to cover the shift, which is Extortion, commercial pressure and considered criminal offence...”. 

The employer did not pay the employee’s entitlements under the ESA, claiming that it had dismissed her for willful misconduct.

Application for Review before the Ontario Labour Relations Board

The employee filed a complaint with the MOL and was successful. The employer brought an Application for Review before the Ontario Labour Relations Board (“OLRB”).

The OLRB found that the employee’s conduct was neither extortion nor blackmail and was instead a negotiation where the employer was seeking to convince an employee to give up her entitlement to a holiday and work.

The employer submitted several additional allegations about the employee to the OLRB, including that dismissal had come after poor performance on her part. The OLRB noted that there was no evidence of any prior discipline or warnings of this alleged poor performance – but that the employer awarded the employee a bonus in June for doing a “fantastic job”.

The OLRB found that the employee had not committed willful misconduct, disobedience, or willful neglect of duty under the ESA. As a result, it awarded her compensation of two weeks’ pay in lieu of notice. She did not receive anything else.

Missed Opportunity

At common law this individual may have been entitled to several months of reasonable notice – well more than the two weeks they were awarded. The employer’s bogus assertion of willful misconduct may also have entitled the employee to an award of damages for bad faith, over and above their entitlement to reasonable notice.

This is an egregious set of facts that an experienced employment lawyer would have had a field day with. An employee made a reasonable request in response to their employer asking them to work on their day off. Instead of accepting this fact, the employer fired them, without notice or compensation in lieu and described their actions (in writing!) as blackmail and criminal. This was after a glowing track record of success with the employer.

Finally, had the matter proceeded to Court, the employee would have been able to recoup at least some of her costs. None of these were available as remedies to the MOL – and once a complaint for termination pay is filed through the MOL, the same matter may not be addressed at court.

By proceeding through the MOL this individual may have left money on the table.

Conclusion

Given the facts of this matter, it is likely that an employment lawyer could have obtained something over and above the employee’s statutory entitlements on dismissal, possibly through a negotiated settlement.

The decision does not indicate that the employee had consulted an employment lawyer – but if they had, they may have advised her of all her options, and what she might be giving up by proceeding through the MOL. It’s okay to settle for less – as long as you know you’re making that choice.

At Rudner Law, we have experience representing both employees and employers in litigation. You can visit our website to learn more about employee-side litigation and employer side litigation, and dismissals.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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