When an employee takes a few days’ leave for a common cold or a medical checkup, it usually does not disrupt the business’s operation. However, when an employee takes extended medical leave due to a serious illness or injury, employers must consider several important factors.

If the situation is not properly handled, employers may face significant legal risks that could result in shocking financial liability and operational disruption. In one example, discussed later in this article, the employer was ordered to pay an employee almost $420,000 for lost income, and they were also required to reinstate the employee. To avoid such disruptions and financial loss, employers need to be aware of two key factors:

1. Legal obligations towards the employee: These include the duty to return the employee to the same or a comparable position and the obligation to accommodate any disabilities up to the point of undue hardship.
2. Set a clear return to work process: A clear return to work process ensures a smooth transition to enable the employee to return to work effectively.

We’ll outline both factors below in more detail.

LEGAL OBLIGATIONS

Legal Obligation to Reinstate Employees

Under employment standards legislation, employers are required to reinstate employees to their most recently held position. If that position no longer exists, the employer must offer a comparable position.

As such, employers should begin preparing for an employee’s eventual return as soon as the medical leave begins.

To meet these obligations, employers should manage the employee’s absence in a way that preserves the right to return. For example, if an employer permanently replaces the employee during their leave, it may be impossible to reinstate them to the same position. Courts have generally ruled that this constitutes a breach of the employer’s legal duty.

The proper approach is to hire a temporary replacement or redistribute the employee’s duties among existing staff until their return.

Defining “Most Recently Held Position”

Determining what constitutes the “most recently held position” can sometimes be contentious. In Elementary Teachers’ Federation of Ontario v. Toronto District School Board, 2005 CanLII 36712, an elementary school teacher taught French before taking pregnancy leave. Upon her return, the school board asked her to teach science. She refused and asked to teach French again, insisting that it was her most recent job. However, the court sided with the employer, finding that the collective agreement defined her position as “teacher,” not by subject taught. As such, the teacher’s grievance was dismissed. This highlights the importance of clear job descriptions and employment contracts. An employee is entitled to the same position, but not the same task/assignment. A well-defined job description and an employment contract help to define what a position is.

Defining “Comparable Position”

Courts assess comparability based on factors such as job location, hours of work, quality of the working environment, degree of responsibility, job security, possibility of advancement, and prestige and prerequisites of the position.

In Sheriff v. Bad Boy Furniture Warehouse Limited, 2011 CanLII 7234, the employer distributed the employee’s necessary job duties among other employees during the parental leave, and offered a different position with the same compensation. The Labour Board found 85% of the employee’s duties had not been distributed, so the previous position still existed. They also found that although the compensation for the new position was the same, the position was not comparable. As such, the Labour Board ordered the employee to be reinstated, and the parties should deal with back wages for the period September 2010 to the date of the hearing, January 11, 2011.

Possibility of No Reinstatement

Although medical leaves are generally job-protected, this does not mean an employer can never terminate an employee during or after such leave. Termination is permissible only if the reason is entirely unrelated to the medical leave, for instance, due to legitimate restructuring.

The burden of proof lies with the employer demonstrating that the termination was unrelated to the leave.

Some seemingly neutral reasons may, in fact, be connected to the employee’s absence. For instance, if an employer realizes during the leave that operations are more efficient without the employee and therefore eliminates the position, the court may find that the termination is related to the leave. Similarly, if a temporary replacement performs better and the employer refuses to reinstate the original employee, this may also constitute a violation.

Additionally, if the dismissed employee can demonstrate that their health condition was a contributing factor in the employer’s termination decision, this may lead to significant legal consequences for the employer, as mentioned in the opening of this article. In Fair v. Hamilton-Wentworth District School Board, 2013 HRTO 440, the school board failed to reinstate a teacher after his return from medical leave.The Human Rights Tribunal found the school board violated the teacher’s human rights, reinstated him, and ordered the school board to pay loss of wages from the termination date to the reinstatement date, which was a period of eight and half years, in an amount of $419,283.89, among other remedies. The Divisional Court and then the Court of Appeal upheld the Tribunal’s decision (see Hamilton-Wentworth District School Board v. Fair, 2016 ONCA 42).

As such, employers should therefore exercise extreme caution when considering termination during or after medical leave. Improper handling may expose them to liability under employment standards and human rights legislation. Any such decision should be carefully documented in writing and legally defensible.

“Sham Reinstatement”

If an employer terminates an employee shortly after reinstating them, the court may view the reinstatement as a sham. Courts are generally skeptical of immediate post-return terminations. However, facts and evidence can overcome this. As an example, a charity may return a person to work, only to learn the next day that the funding supporting their position has been unexpectedly cut, leaving the charity with no means to pay them and having to terminate their employment once the residual funding runs out. In such a case, the court will probably understand.

Legal Obligation to Accommodate

For employees who can return to work after taking medical leave, it doesn’t necessarily mean that they are fully recovered from their medical condition. As such, they may still need some accommodation to perform. Employers are required to provide reasonable accommodation up to the point of undue hardship.

What is Undue Hardship

Undue hardship is a high bar, but not an impossible one. The employer doesn’t have to do everything in their power just to keep the employee employed. As explained by the Supreme Court in Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), 2008 SCC 43 (CanLII), [2008] 2 SCR 561.

The test [for undue hardship] is not whether it was impossible for the employer to accommodate the employee’s characteristics.  Although the employer does not have a duty to change working conditions in a fundamental way, it does have a duty, if it can do so without undue hardship, to arrange the employee’s workplace or duties to enable the employee to do his or her work.  The test for undue hardship is not total unfitness for work in the foreseeable future.  If the characteristics of an illness are such that the proper operation of the business is hampered excessively or if an employee with such an illness remains unable to work for the reasonably foreseeable future even though the employer has tried to accommodate him or her, the employer will have satisfied the test.  The employer’s duty to accommodate ends where the employee is no longer able to fulfill the basic obligations associated with the employment relationship for the foreseeable future.

Undue hardship includes excessive cost, significant health and safety risks, serious disruption to business operations, and bona fide job requirements.

What is a Bona Fide Job Requirement

To establish a bona fide job requirement, the employer must:

• Demonstrate that it adopted the standard for a purpose that is rationally connected to the performance of the job.
• Establish that it adopted the standard in an honest and good-faith belief that it was necessary to fulfill that legitimate work-related purpose.
• Establish that the standard is reasonably necessary to accomplish its work-related purpose and that it is impossible to accommodate the employee without undue hardship.

However, whether the employer has discharged their duty is always a tricky question. Employers should proceed cautiously before assuming they have satisfied their obligation.

Procedural and Substantive Obligations

It is also worth noting that there are two aspects of the duty to accommodate: the procedural aspect and the substantive aspect. The procedural part of the duty requires the employer to engage with the employee in exploring reasonable accommodation. As such, failing to initiate such dialogue may constitute a breach.

Employers should proactively ask returning employees whether they require any accommodation or have any work restrictions. However, they should not demand medical documentation proving full recovery (as it may incur costs to employees) unless justified and supported by good reasons and evidence, such as health and safety concerns for the workplace.

RETURN TO WORK PROCESS

Once an employee indicates they are returning to work from a health-related leave, it is time to find out:

• Is the employee returning without any need for accommodation?
• Is a medical clearance for return to work necessary?
• Do you have a plan to re-integrate the employee into the workplace?
• Is a return to work plan necessary?
• Does return to work include a request for accommodation, or an apparent need for accommodation, that needs to be discussed?

Return to work plan

If accommodation is still needed when an employee returns to the workplace. You may need a return to work plan. This helps the employer meet their duty to mitigate, both procedurally and substantially. Its goals include:

• Return the employee to their previously held or comparable position.
• Identify potential barriers and solutions to the ability to perform core and essential duties of the position.
• Appropriate and reasonable accommodation.
• Clearly define timelines if accommodation is gradual or temporary.

The return to work plan should be written and updated as necessary.

Re-integration Plan

A reintegration plan differs from a return to work plan. After a lengthy absence, the workplace may have changed, introducing new staff, procedures, or tools. Re-integration focuses on helping the employee adapt to these changes and restore their full performance capacity.

Such a plan may include:

• Additional training or an adjustment period to accommodate any workplace changes, such as new processes, tools, and staff; and
• Allow time for re-integration to full performance expectations, to reduce potential trauma.

Employers should consider providing a supportive re-integration plan, especially after a lengthy medical leave.

Final Thoughts on Preparing for an Employee’s Return to Work After Medical Leave

Handling an employee’s return from medical leave requires careful balancing of legal obligations, operational needs, and compassionate management. Employers must ensure compliance with employment standards and human rights laws by reinstating employees appropriately, providing necessary accommodations, and avoiding decisions that could appear retaliatory.

Returning an employee from medical leave can be a path filled with landmines. However, by planning early, maintaining transparent communication, and implementing structured return to work and re-integration plans, employers can foster a supportive environment that upholds both legal compliance and employee well-being. Ultimately, a thoughtful and lawful approach not only mitigates risk but also fosters a stronger workplace trust and morale.

Constructive dismissal occurs when an employer’s actions substantially breach the essential terms of the employment contract.

Tread carefully and quickly when facing such a situation, as constructive dismissals are complicated. You may have only 10 days to object. Otherwise, you may lose your right to a better termination payout if you do not act fast enough, or you may find yourself losing your job without a termination package if your claim does not meet the requirements for constructive dismissal.

What is Constructive Dismissal?

Constructive dismissal occurs when your employer’s acts and conduct repudiate the contract. This can, for example, include unilateral changes to salary, position, or duties, or creating a work environment that is intolerable due to harassment or unsafe conditions.

As explained by the Supreme Court in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, there are generally two scenarios of constructive dismissal: (i) your employer substantially breached an essential term of the employment contract, and (ii) if your employer’s conduct shows that it intended not to be bound by the contract.

Why You Should Act Fast When You’ve Been Constructively Dismissed

If you suspect you are being constructively dismissed, act immediately.

Delaying your response can lead to legal complications, including the assumption that you have agreed to any changes in your role or employment.

In Kosteckyj v Paramount Resources Ltd, 2022 ABCA 230, Paramount unilaterally announced across-the-board salary and benefit reductions as part of its corporate cost-cutting measures. Ms. Kosteckyj neither expressly rejected nor accepted the salary reduction. Without saying a word, she continued to work for three weeks following the pay reduction. The company then downsized to cut costs further, and she was fired. The Alberta Court of Appeal found that the fact she continued to work for three weeks after the reduction in pay was “indisputable evidence” that she had accepted the new terms of employment. The court ruled that an employee has 10 days to reject the proposed changes, otherwise it was implied that the changes were accepted. As a result, the termination pay she received from being fired was calculated based on her newly reduced salary. At the end of the day, her failure to signal her rejection of the lower salary meant that her termination package was $10,000 less than it would have been if she had expressed disagreement with the pay changes.  A simple failure to act cost her significantly.

First Steps When You’ve Been Constructively Dismissed

There are two key actions you need to take right away:

1. Express your disagreement: You must let your employer know (preferably in writing) that you do not accept the changes. If you do not make your disagreement clear, the court could interpret your continued employment as consent to the new terms, potentially destroying your case.
2. Consult a lawyer: Constructive dismissal cases are complicated and require expert legal advice to navigate. From understanding the allegations of harassment to determining whether changes to your job are substantial enough to constitute a breach, a lawyer will guide you through the process.

Here are two key things you should avoid.

1. Don’t accept new terms: Never agree (in writing or verbally) to the new terms your employer offers if you feel they amount to constructive dismissal. Accepting the new terms, may undermine your claim.
2. Don’t resign hastily: If you resign without understanding your legal rights, you risk losing severance and even unemployment benefits.

Why You Should Act Cautiously

Constructive dismissal claims are often complex and fraught with pitfalls. Below are some key considerations to be cautious of before making a claim.

Constructive Dismissal Is Not Easy to Establish

Not every change to your employment terms will qualify as constructive dismissal. The court will also try to understand the changes in a broader context.

For example, in Boyer v. Callidus, 2024 ONSC 20, (upheld by the Court of Appeal in Boyer v. Callidus Capital Corporation, 2025 ONCA 79, the employee did not appeal), the employee, Mr. Boyer, sued the employer, Callidus, for constructive dismissal, in the face of his planned retirement, due to the reduction of his responsibilities and the company’s toxic work environment. The court found that Mr. Boyer was not constructively dismissed; instead, he had voluntarily resigned.

The court found that, although Callidus transferred Mr. Boyer’s responsibilities before his retirement date, it was understandable, as the transition should have been done before he retired, so it was not constructive dismissal.

Mr. Boyer also alleged that he was constructively dismissed due to conduct by Callidus, including unjustified criticism and vague, unfounded allegations against him, as well as Callidus creating a hostile and embarrassing work environment.

However, the court found that although Mr. Glassman’s criticisms of Mr. Boyer may have been unjustified, and his language was harsh, it did not amount to constructive dismissal. The physical attack incident was not directed at Mr. Boyer, so this unfortunate incident that Mr. Boyer witnessed did not render his continued employment at Callidus intolerable, thereby amounting to constructive dismissal.

As a result, the motion judge found Mr. Boyer was not constructively dismissed, but had resigned, thereby rejecting his claim for pay in lieu of common law reasonable notice.

For constructive dismissal to be valid due to a toxic environment, the employer must have behaved in a manner that renders continued employment intolerable, a high standard.

 

The Termination Clause in Your Contract May Still Apply

Even if you are constructively dismissed, a termination clause in your contract may still limit your entitlement.

In Moore v. Apollo Health & Beauty Care, 2017 ONCA 383, the Court of Appeal upheld the trial judge’s part of the decision that the termination clause was still enforceable despite a finding of constructive dismissal.  The trial judge found that Apollo constructively dismissed Ms. Moore by changing her responsibility from that of a non-supervisory line technician to a line supervisor. However, the following termination clause was still enforceable:

If Apollo terminates your employment, you shall be entitled to receive only such notice of termination, termination pay, benefit continuation and/or severance pay, if any, as are required by the [Employment Standards Act, 2000] in the circumstances of the termination. This paragraph defines and limits your full entitlement to notice of termination, pay in lieu of notice, benefit continuation and severance pay upon termination of employment, and shall apply regardless of any changes to the terms and conditions of your employment (including changes in position, duties and responsibilities, reporting relationships, and compensation). Please read it carefully.

[emphasis added]

The Court of Appeal found that the terms of the above clause specifically address the calculation of notice upon constructive dismissal. As such, the termination clause was enforceable. As a result, the employee was not entitled to common law notice or pay in lieu of such notice.

Why does it matter? It matters because the termination clause may significantly reduce your termination entitlement, potentially rendering the constructive claim unworthy of pursuit under certain circumstances, compared to continuing to work. For example, a non-managerial employee who has worked for 3 years may be entitled to about 3 months’ reasonable notice or pay in lieu of notice. However, if the termination clause is enforceable, they may receive only 3 weeks’ notice or pay in lieu of such notice, significantly reducing the amount they may receive due to constructive dismissal.

You Have a Duty to Mitigate Your Loss

Employees claiming constructive dismissal must actively attempt to mitigate their losses by seeking new employment. This means that if it is reasonable for the employee to continue working to reduce their income loss due to constructive dismissal, they should do so, especially when constructive dismissal is due to business needs. As explained by the Supreme Court in Evans v. Teamsters Local Union No. 31, 2008 SCC 20.

Therefore, even if an employee successfully establishes constructive dismissal, but fails to mitigate their loss by continuing with the new position with the same employer (if that’s reasonable to do), they may not be awarded damages in the end.

Final Considerations if You Have Been Constructively Dismissed

Constructive dismissal claims can be complex, and the outcome often depends on specific facts and nuances. To protect your rights:

• Act quickly: Express your disagreement to avoid being deemed to have acquiesced.
• Consult a lawyer: Legal guidance is essential to navigate the complicated details.
• Avoid rash decisions: Don’t accept new terms or resign without fully understanding your legal position.

Legal professionals are crucial to help you assess whether you have a valid claim and to avoid making mistakes that could harm your case.

By taking the right steps, you can protect your interests and pursue the best course of action if you’ve been constructively dismissed.

Many employers play hardball with employees they terminate. They make a lowball offer for termination pay and drag employees into litigation, hoping the time and costs of litigation will deter employees from pursuing the full extent of their claims. While this approach can be effective, a recent decision addressed the risks of being unnecessarily aggressive, with a significant costs award in light of the hardball tactics.

In Janmohamed v. Dr. M. Zia Medicine Professional Corporation, 2022 ONSC 6561 (“Janmohamed“), the employee accepted the employer’s $15,000 offer to settle their wrongful dismissal dispute.  However, since the parties could not agree on costs, they asked the court to assess it. Justice Myers awarded $30,000 in legal costs against the employer, on the basis of what is “fair and reasonable” in the circumstances. This doubled the settlement the employer agreed to pay the employee!

This case serves as a warning to employers about the potential financial risks of playing hardball with employees for wrongful dismissal claims.

Justice Myers made it clear that employees terminated without cause are “entitled to pay in lieu of reasonable notice” and that employers should not feel entitled to strategically take an aggressive stance to wear down an employee. Notwithstanding finding that neither party held the moral high ground, he found that there is a noticeable power imbalance, and that employers should not be incentivized to lowball, forcing employees to sue to obtain what everyone knows is justly due.  The conclusion was that this power imbalance was highly unfair to the employee, and that it would be fundamentally unjust in this case to leave the plaintiff under water as a result of having to bring the employer to a position that the employer should have offered at the time it terminated the employee.

In another case, Chu v China Southern Airlines Company Limited, 2023 BCSC 21 (CanLII) (“Chu”), the employer was ordered to pay $100,000 in punitive damages and $50,000 in aggravated damages after the courts found that Chu was wrongfully dismissed. Mr. Chu was also awarded a 20-month notice period, resulting in an award of approximately $58,000 for lack of notice given. China Southern Airlines (CSA) had demoted Mr. Chu multiple times and placed him in roles for which he was unqualified. After he failed to perform up to the expected standards, he was dismissed at the age of 68. The court found that CSA dealt with the situation in a “duplicitous and unfair” manner and did not fulfill basic employer legal obligations – such as provide Mr. Chu with a record of employment (ROE).

More recently, in Kondaj v Crossbridge and Duka (“Kondaj”), the new building service provider refused to continue employment of Mr. Kondaj, an employee of its predecessor, and terminated him without cause; the employee sued both of them for wrongful dismissal damages and made an offer to settle the dispute at $27,000. The two employers did not dispute that the employee was entitled to common law notice, but neither accepted the offer to settle. Instead, they continued to argue over which should be liable for this common law liability, and dragged the employee through a hearing. Both employers were worse off. The employee eventually won a judgment of $78,925, with a cost award of $56,355. The cost to the liable employer was over $100,000 more than the $27,000 offer that could have been accepted, plus their own legal fees. Even the employer, whom the court held not liable for the termination pay, paid far more in legal fees than the offer, and did not receive any costs award in their favour.

While there may be some merit in starting off with a position that is more beneficial to the employer, holding on to it would rack up legal fees and the risk of being punished by a cost award. Instead, employers should consider handling termination situations in a fair and reasonable manner by making a reasonable offer and being open to compromise to resolve the dispute. By taking this more level approach, employers can minimize the risk of costly legal fees, putting the risk on the employee if they are the ones taking an unreasonable stance.

The cases of Janmohamed, Chu, and Kondaj serve as cautionary tales for employers about financial risks of taking an unreasonably hardline approach during the termination process.

Bottom line – a grammar mistake in employment contracts can cost employers millions of dollars if disputed. Employers need to be confident that an employment contract will stand up to scrutiny in the courts. That means ensuring compliance with the latest updates in employment laws as well as something as simple as proper grammar. Improper use of grammar can lead to ambiguities and termination clauses that are open to interpretation.  Employers should regularly review contracts and ensure they are properly drafted.

A single missing comma cost this employer millions. In a famous US case, O’Connor v. Oakhurst Dairy, 851 F.3d 69 (2017), the plaintiffs, the delivery drivers for Oakhurst Dairy, sued the company for overtime pay. The employer argued that these drivers were exempt from overtime pay, because the law states employers are not required to pay overtime to employees whose work involved “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of (1) Agricultural produce; (2) Meat and fish products; and (3) Perishable foods.” Since drivers distributed these products, they were exempted. However, the drivers argued that the phrase “packing for shipment or distribution” should be understood as one single activity, instead of two (i.e., (i) packing for shipment and (ii) distribution); as the drivers were not involved in packing, they were not exempted from overtime pay. The district court ruled in favour of the company. The drivers appealed the decision to the First Circuit court. The First Circuit admitted that because there is no serial comma in the disputed phrase, it created ambiguity regarding whether the phrase meant one single activity or two. However, because ambiguities in the state’s wage and hour laws must be construed liberally to accomplish their remedial purpose, the court ruled in favour of the drivers and reversed the district court’s decision. Later, in 2018, the employer settled the case with the drivers, paying them $5 million in back overtime pay. A missing comma cost this employer $5 million.

In a recent Canadian employment law case, Brocklehurst v. Micco Companies Limited, 2025 NSSC 192 (“Brocklehurst”), a missing comma was fatal to an employment contract’s termination clause, leading to wrongful dismissal damages of over $50,000.

In Brocklehurst, the disputed termination without cause clause provided as follows:

Your employment may be terminated by Micco without cause, upon provision to you of the following payments:
(i)	any portion of the annual salary and accrued vacation pay, if any, that has been earned by your [sic you] prior to the date of termination by [sic, but] not yet paid;
(ii)	continued participation in Micco group health plan for such time as may be required under Nova Scotia Labour Standards legislation; and
(iii)	only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which you are entitled under the Nova Scotia Labour Standards legislation.

[emphasis added]

Based on the above subsection (iii), the employer contended that the employee was only entitled to the minimum termination entitlements under the statute. The court disagreed. Because there was no comma before the qualifier, “to which you are entitled under the Nova Scotia Labour Standards legislation”, it may be read such that the qualifier does not apply to the notice of termination, but only to the severance pay.  As such, the provision failed to meet the standard of “express language” that creates a high level of clarity, contracting out of the common law. As a result, with other reasons, the termination clause failed, and the employer had to pay the employee’s entitlements under the common law, which was much higher than the minimum statutory entitlements that the termination clause intended to achieve.

In this case, it was not a million dollar comma, but it could be in other cases. The lesson is clear: a single grammatical oversight in legal documents could be catastrophic. When it matters, let the professionals draft it.

As 2025 draws to a close, Ontario and federal employment law continue to evolve. This year has introduced a combination of new statutory entitlements, compliance responsibilities, and judicial rulings.

Staying informed is essential for employers and HR professionals. The following highlights the most significant developments of 2025, as well as some changes expected in 2026. Review the updates and assess their impact on your organization. If necessary, consult a legal expert. Being proactive now can prevent issues later.

#1: Contradicting Court Decisions: Does “At Any Time” violate the ESA?

Ontario courts issued conflicting rulings in 2025 regarding whether the phrase “at any time” in termination clauses violates the Employment Standards Act, 2000 (“ESA”).

In Baker v. Van Dolder’s Home Team Inc. (“Baker”), Justice Sproat held that “at any time” invalidates the termination without cause clause, quoting Dufault v. The Corporation of the Township of Ignace (“Dufault”). Similarly, in Chan v. NYX Capital Corp., Justice Parghi found the phrase “at any time and for any reason” illegal.

Conversely, in Li v. Wayfair Canada ULC (“Wayfair”), Justice Dow upheld a similar clause containing “at any time for any reason”, stating it was “distinguishable” from previous rulings but without a clear explanation. Additionally, in Jones v. Strides Toronto, Justice Moore ruled that “at any time” alone does not breach the ESA, as it differed from Dufault due to its association with “sole discretion.”

Taken together, some judges view “at any time” as inherently offending the ESA’s protective purpose; others treat it as harmless when paired with clear ESA-anchored language. The Court of Appeal will hear the Baker and Wayfair cases together in early 2026. The “at any time” debate is expected to be resolved next year.

Takeaway: Until the Court of Appeal rules on this issue, employers should avoid “at any time,” “for any reason,” and “in its sole discretion” phrasing altogether and use precise ESA-compliant language to reduce risk.

#2: Ontario Court Of Appeal Upheld an ESA Minimum Termination Clause

Not surprisingly, in Bertsch v. Datastealth Inc., the Ontario Court of Appeal upheld a 2024 lower court decision, holding that a termination clause limiting the termination entitlement to the ESA minimum was enforceable.

Takeaway: Properly drafted termination clauses that clearly exclude common law entitlements and limit termination entitlements to the ESA can withstand court scrutiny. To mitigate the risk of significant common law payouts, employers should seek legal counsel to draft and review these clauses effectively.

#3: Ontario Court Held a Global Contract Unenforceable

On the contrary, in Boyle v. Salesforce.com, the court held that Salesforce’s global “for cause” clause was unenforceable under Ontario law because it created ambiguity and failed to comply with the ESA. The contract combined U.S.-style “at-will” language with local carve-outs, stating that employment could be terminated “at any time, with or without cause,” except in “certain non-U.S. jurisdictions.” The court found it impossible for an Ontario employee to know which provisions governed termination, especially when the agreement directed employees to consult the company’s legal department if uncertain.

The court concluded that the clause was ambiguous and non-compliant with the ESA, rendering the entire termination provision void and entitling the employee to common law notice.

Takeaway: The decision underscores that one global contract is unlikely to fit all jurisdictions. Employers operating in multiple jurisdictions must ensure Ontario contracts have termination language that specifically complies with the ESA.

#4: Arbitrary Definition of “Cause” Invalidates a Termination Clause

Another lesson for employers. In Ghazvini et al v. Canadian Imperial Bank of Commerce, the Ontario Superior Court held that CIBC’s termination clause was illegal and unenforceable because it defined “cause” more broadly than the Canada Labour Code (“CLC”) permits. The clause listed examples such as unsatisfactory performance, breach of policy, and failure to complete training—none of which necessarily meet the statutory threshold of serious misconduct under section 229.1 of CLC. Since the “for cause” wording breached the statute, the entire termination provision was void, and the employees were entitled to common law reasonable notice instead of the contractual two-weeks-per-year formula.

Takeaway: The case reinforces that federally regulated employers should keep their termination clauses simple and avoid any “for cause” definitions that extend beyond statutory limits.

 #5: Termination Clause Unenforceable Because of a Missing Comma

In Brocklehurst v. Micco Companies Limited, the Nova Scotia Supreme Court ruled that the employer’s termination clause did not effectively limit common law notice due to grammatical ambiguity and improper statutory reference. The clause stated that upon termination without cause, the employee would receive “only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which you are entitled under the Nova Scotia Labour Standards legislation.”

The court found that the phrase “to which you are entitled” could only attach to “severance pay,” not “notice of termination,” due to a missing comma, leading to ambiguity. Additionally, the reference to “severance pay,” a term not recognized in Nova Scotia’s Labour Standards Code, further complicated the clause’s intent and reinforced its ambiguity. As a result, the employer was ordered to pay 8 months’ reasonable notice under common law, instead of the 4-week statutory minimum.

Takeaway: Employers should realize the necessity for clear and unambiguous language in termination clauses. Even a grammatical error can lead to a huge payout.

#6: “Buyer’s Remorse” Doesn’t Change the Settlement Deal in Emails

In Johnstone v. Loblaw Companies Limited, the Ontario Superior Court upheld that a settlement agreed upon via email is binding, even without signed formal minutes. Mr. Johnstone, an employee of Loblaws, accepted a settlement offer that was contingent on mutual agreement on documentation. After receiving a draft, he attempted to include new conditions regarding a house purchase, but Loblaws declined to renegotiate and sought summary judgment to enforce the settlement.

The court ruled that all essential terms—such as notice, legal fees, and reference letters—were agreed upon and that the “subject to mutual agreement on the supporting documentation” phrase did not provide an escape. The court noted that unsigned documentation does not prevent a binding agreement when key terms are mutual. Johnstone’s attempt to modify terms was deemed “buyer’s remorse,” which cannot undo an otherwise enforceable contract. The court granted summary judgment to Loblaws and dismissed the employee’s wrongful dismissal claim.

Takeaway: Once the parties confirm agreement on essential terms, even in an informal way, a party cannot later withdraw simply because formal minutes remain unsigned. Maintain clear, contemporaneous records of settlement negotiations and terms agreed upon, as these will determine enforceability if disputes arise.

#7: Ontario: Long-term Illness Leave in Effect

On June 19, 2025, a maximum 27-week long-term illness leave for employees who have worked at least 13 consecutive weeks came into effect, under the ESA. This leave is unpaid. An employee must obtain a medical certificate indicating a serious medical condition and the duration of time the employee will be unable to work due to this condition. Employers must retain records related to the leave for 3 years after it ends.

Takeaway: The new long-term illness leave policy will require Ontario employers to be prepared to manage workforce coverage during extended absences, revise leave policies and properly retain HR records.

#8: Ontario: Certain Information Must Be Provided to Employees

Beginning on July 1, 2025, under the ESA, certain employers must provide new employees with the following written information before their first day of work or as soon as possible after:

• Legal and any operating business name
• Contact information (address, phone number, contact names)
• General description of the initial work location
• Starting hourly wage or commission
• Pay period and payday
• Description of initial anticipated work hours

Takeaway: Although exemptions apply to employers with fewer than 25 employees and to assignment employees from temporary help agencies, it is still recommended for all employers to include the information above in their written employment contracts/offers.

#9: Federal: Leave Related to Pregnancy Loss

Under expected changes to the CLC, employees in federally regulated workplaces will be entitled to a leave of absence after a pregnancy loss , if:

• their pregnancy does not result in a live birth;
• their spouse or partner’s pregnancy does not result in a live birth; or
• they intended to be the legal parent of a child from another person, like a surrogate.

The leave’s length will be up to eight weeks for stillbirths (after the 20th week or 500g) and up to three days for other pregnancy losses. The first three days are paid. These changes are expected to take place by the end of 2025.

Takeaway: Federally regulated employers should prepare to implement policies and support structures that accommodate the new leave provisions for pregnancy loss under the CLC, and consider these provisions when making workforce management plans.

#10 Ontario: New Job Posting and Pay Transparency Requirements in 2026

In 2026, Ontario employers with 25 or more employees must disclose the expected compensation or a salary range when publicly posting job openings. The salary range must not exceed $50,000. This requirement does not apply to positions offering salaries over $200,000.

Additionally, employers must indicate whether artificial intelligence (AI) is involved in the hiring process. Employers are prohibited from requiring Canadian experience. Job postings must clearly specify whether they pertain to an existing vacancy. Lastly, candidates must be informed of hiring decisions within 45 days following their interviews.

#11: Federal New Leaves in 2026

• Certain Bereavement Leaves May Become Longer in 2026

CLC currently permits 10 days of leave of absence in the event of the death of a member of their immediate family, or the death of a family member for whom the employee was taking compassionate care leave or critical illness leave. Amendments to CLC will permit up to eight weeks of bereavement leave for the death of an employee’s child or the child of their spouse or partner. These amendments may come into effect in 2026.

• Leave for Placement of Child May Come into Effect in 2026

A new unpaid leave of up to 16 weeks has been introduced to CLC to assist federally regulated employees who need to manage responsibilities related to placing a child(ren) in their care, whether it be through adoption or surrogacy. Employees can receive EI benefits during this leave. This new leave may take effect in 2026.

 Conclusion

As we look ahead, it is crucial for employers in Ontario and across federally regulated workplaces to stay informed and proactive regarding these evolving employment laws. The developments of 2025 highlight the importance of careful compliance and the nuances involved in drafting employment documents, including contracts, policies, and job postings. Employers should consult with legal experts to ensure their documents align with the latest legal requirements while effectively addressing the needs of their workforce.

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The firm takes pride in guiding clients through investigations, mediation, and shareholder disputes. They recognize mediation as an essential step, helping clients save time and resources while resolving issues fairly.

When settlement is not possible, their litigation team is ready to represent both plaintiffs and defendants through every stage of a case. This full-service approach makes them versatile and client-centered.

For employers, an outdated employment contract is not just a technical oversight: it is a financial liability waiting to happen. In employment law, the legal landscape is constantly changing; even a single flaw or an outdated clause in employment contracts can turn a manageable termination into an expensive payout.

Employment contracts are only as strong as their most recent review. Laws evolve, courts re-interpret clauses, and what was enforceable last year may be useless in court today. A proactive review protects the business from unexpected costs and lengthy litigation.

The Law Will Not Stand Still — Neither Should Employment Contracts

No termination clause is evergreen. The law is constantly changing, and when a termination clause is found to breach the Ontario Employment Standards Act, 2000 (“ESA”), the result is simple: it is unenforceable. That means the employee receives common law reasonable notice, which is often at least four times the statutory minimum under the ESA.

The 2019 decision in Waksdale invalidated almost all employment contracts by holding that a flaw in part of the termination provision invalidates the entire termination section. In 2024, Dufault made more clauses unenforceable by rejecting language such as “at its sole discretion” and “at any time” as inconsistent with the ESA.

Even punctuation can be costly. This year, a Nova Scotia court struck down a termination clause because of a missing comma and problematic reference to severance pay.

If employment contracts have not been reviewed in years, there is a real risk they contain similar flaws.

Courts Seem to Be Awarding Longer Notice Periods, and It Is Costing Employers

Recent cases show courts granting longer reasonable notice than many employers expect. Employers should regularly review their employment contracts to ensure they are under proper contractual protection.

It is much easier for executives to get longer notice periods, which results in significantly higher severance packages due to their higher salaries. In a recent case, a Vice-President with only 4 years of service was awarded 12 months’ notice. In another case, also in 2025, an executive with only 7 months of service was awarded 14 months because the court found he had been induced to leave secure employment.

Courts have established 24 months as the “rough upper limit” for reasonable notice, which can only be exceeded in “exceptional circumstances.” Now it seems that it is easier for employees to establish “exceptional circumstances” than before. In recent years, courts have awarded employees more than 24 months where “exceptional circumstances” exist, including:

• A lifetime career with a single employer, combined with age and seniority at termination (26 months, a 2016 case).
• Termination effectively amounted to forced retirement, where age, non-transferable skills, and education limited job prospects (26 months, a 2022 case).
• Extremely long service with one employer, leading to concerns about adaptability in a new workplace (27 months, a 2022 case).
• Highly specialized skills tied exclusively to the employer’s operations, limiting re-employment opportunities (30 months, a 2023 case).

For employers, this means that once a termination clause fails, the potential payout could be far greater than expected.

What Does This Mean for Employers?

Relying on contracts drafted years ago is risky. Termination clauses may be out of date, and courts are leaning toward awarding longer notice periods than ever before.

Review employment contracts regularly, ideally every year, with experienced legal guidance. A relatively small investment in annual reviews can prevent a much larger expense of litigation or inflated termination payouts.

If you consider that you are working full-time for this one “employer”, then in all likelihood, you are not an independent contractor. If this employer has fired you, and claims you are not entitled to notice of termination or any pay in lieu of notice, or offers a small amount in return for a release, the good news is that there is a lot you can do.

Rather than walk away empty-handed, understand your rights. Start by consulting an experienced employment lawyer, who can help you understand whether you are an employee or perhaps a dependent contractor, entitled to termination notice or termination pay in lieu of such notice. There is a good chance that you are entitled to significant termination pay.

Below is an overview of why you might be owed significant termination pay.

What the Law Says

Under common law, independent contractors are not entitled to notice of termination or pay in lieu of notice, unless their contract explicitly provides for it.

However, courts and tribunals have recognized that some individuals labelled as “independent contractors” are actually employees or dependent contractors, both of whom are generally entitled to notice of termination or pay in lieu under common law, unless a valid contractual clause provides otherwise.

Three Legal Categories of Workers

As explained in Keenan v. Canac Kitchens Ltd., 2015 ONSC 1055, (“Keenan”, affirmed by Ontario’s Court of Appeal, 2016 ONCA 79) at paragraph 17, “[e]mployment relationships exist on a continuum; with the employer/employee relationship, at one end of the continuum, and independent contractors at the other end. Between those two points, lies a third intermediate category of relationship, now termed dependant contractors.”

Employees are fully protected by and entitled to minimum entitlements on termination under employment standards legislation (“ESL”) and may be entitled to reasonable notice under the common law. Dependent contractors are contractors who are economically dependent on a single client. They are generally entitled to reasonable notice upon termination.  True independent contractors are self-employed, with multiple clients and significant control over their work. They are not entitled to termination notice unless specified in their contract.

As confirmed by Ontario’s Court of Appeal in McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916, the first issue is whether a worker is an employee or contractor.  If the worker is a contractor, the court will then consider whether the worker is a dependent contractor or an independent contractor.

Employee v Contractor

In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, the Supreme Court explained how to tell if someone is an employee or an independent contractor. The main question is whether the person is running their own business or working for someone else. Although there is no universal test, the following factors are usually considered:

• how much control the employer has over the worker’s activities,
• whether the worker uses their own equipment,
• if the worker hires help,
• how much financial risk the worker takes,
• how much responsibility the work has for investment and management, and
• what the opportunity the worker has for profit in the performance of their tasks.

Dependent v Independent Contractor

As examined in Keenan, the court will usually consider the following principles to determine if a worker is a dependent or independent contractor:

• Exclusivity of the relationship (do you work only for one company?).
• Degree of control the company has over your work.
• Ownership of tools or equipment (do you provide your own?).
• Opportunity for profit and risk of loss (can you make a profit or suffer a loss?)
• Ownership of the business. (Whose business is it?)

To be considered a dependent contractor, exclusivity does not have to be completely exclusive at all times. In affirming Keenan, the Court of Appeal explained that the court will look at the full history of the relationship, rather than a point in time, to decide whether the worker was economically dependent on the company, due to exclusivity or a high level of exclusivity. In Keenan, although the workers worked for the hirer’s competitor during the last two years of the relationship due to a slowdown in the hirer’s work, the court still found them to be dependent contractors, as more than 90% of their income came from the hirer and they worked exclusively for the hirer for more than 20 years.

If you have recently received a Performance Improvement Plan (“PIP”) and are feeling uncertain about your next steps, you’re not alone. You may feel blindsided, especially if you have not been told that your performance is a problem: Is this a genuine attempt to help me improve, or is it a step toward termination?

Do not let confusion and anxiety overwhelm you. Gain clarity on what a PIP truly means, explore your options for improvement, and learn how to respond to the PIP. Understanding your situation can empower you to make informed decisions about your career.

What You Should Know About Your PIP?

In theory, a PIP is a tool used by employers to help an employee correct performance issues through clear expectations, measurable goals, and constructive feedback. It is meant to be part of a good-faith effort to support improvement on specific performance issues.

However, that is not always how it plays out in practice. Some employers use PIPs as a strategic way to build a paper trail to justify letting an employee go “with cause”.

Here are some of the red flags that your PIP may be more about protecting your employer than genuinely helping you succeed:

• You were never given feedback or warnings about your performance before the PIP.
• The goals are vague, unrealistic, or impossible to meet within the timeline provided.
• You were not provided with or were denied any resources or assistance to improve the performance issues alleged by the employer.
• You are being micromanaged or excluded from meetings you used to attend.

If any of these apply to you, the PIP may be part of a plan to manufacture cause for dismissal or to push you to resign.

A PIP May Be A Cover-up for Your Termination And You May Get Additional Compensation

Some employers use PIPs as a cover for their intent to terminate. They think that if the PIP fails, they may be able to justify a “cause” termination, or pressure you into quitting, to avoid paying you what you are owed – your notice of termination or pay in lieu of notice.

However, in Ontario, employers must meet a high legal threshold to terminate someone “for cause” without paying reasonable notice under common law. A single poor performance review or PIP is almost never enough. To prove cause, the employer must show serious and repeated subpar performance and that the employee was given a reasonable opportunity to improve.

In some cases, a bad-faith PIP, especially if combined with other mistreatment (such as public shaming), can justify a constructive dismissal claim. That means your employer has essentially terminated you through their conduct, even if they have not said the words.

Sometimes, an employee may be awarded additional damages due to their employer’s bad-faith implementation of PIP. In a 2010 Ontario case, an employee was awarded $45,000 for their employer’s manner of termination, including the failure to carry out the PIP in good faith.

How to Protect Yourself

If you have been put on a PIP, here is what you can do:

Document Everything

Signing a PIP to acknowledge receipt does not mean you agree with it. Clearly state in writing (email is fine) if you dispute the allegations, timelines, or process. This protects your position later if legal action is necessary.

Additionally, save emails, meeting notes, and any correspondence related to your performance.

Speak to a Lawyer

If you have been put on a PIP, a lawyer can help you:

• Respond to the PIP in writing.
• Negotiate a severance package if you’re being pushed out.
• Assess whether the PIP process amounts to constructive dismissal.
• Assess whether you are entitled to additional compensation due to how your employer implemented the PIP.

Next Steps

While your employer may be acting in good faith with the intent to help you, if it feels off or if it comes as a surprise that may not be the case. Remember, your employer cannot get rid of you without consequences.

If you have received a PIP and feel it is being used unfairly, especially if it came out of nowhere or seems designed for you to fail, do not wait until you are dismissed. Speak with an employment lawyer right away. You may be entitled to a severance package, and in some cases, additional damages.