Over the course of 2024, employers had to stay on top of a dizzying array of legislative changes as well as caselaw developments. Significant changes occurred in employment legislation across Canada last year, including updates in Ontario, British Columbia, and federal jurisdictions. These amendments introduced new obligations for employers. Failure to comply with changes throughout 2024 could result in costly legal battles and higher-than-necessary settlements of employment disputes.

It is essential for employers to understand how legislative changes and court decisions will affect both the way employment contracts are drafted and how disputes could be settled.  Below, we summarize the crucial employment law updates so employers can take a forward-thinking approach to ensure compliance and stay ahead of emerging workplace standards for the year ahead.

#1: Termination Clause Unenforceable Due to Vague Language

Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 3878 highlights the importance of carefully drafted and specific termination clauses. In this case, the Ontario Superior Court struck down a termination clause that permitted the employer to dismiss employees “at any time.” The court found that this clause violated the ESA by undermining the protections from job-protected leaves under the legislation.

On December 19, 2024, the Ontario Court of Appeal upheld the original ruling that the termination clause language was incompatible with the ESA.

This case reminds employers that they cannot use vague or sweeping language in their contracts to circumvent statutory obligations. Termination provisions must explicitly align with ESA entitlements. Regularly reviewing and revising existing employment agreements for compliance based on updated case law and legislation changes is essential to ensure contracts are valid.

#2: Fresh Consideration Affects Termination and Settlement Payments

When revising or drafting new employment contracts, 2024 case law underscores the importance of fresh consideration – especially when it comes to termination and settlement payments.

In Giacomodonato v. PearTree Securities Inc., 2024 ONCA 437, both levels of courts upheld a second contract that reduced the employee’s incentive payouts and introduced a termination clause, finding it valid due to fresh consideration, including a $40,000 payment and extra vacation time. The courts affirmed that while fresh consideration is essential, its adequacy is not assessed – any new benefit may suffice.

By way of contrast, in Sui v HungryPanda Tech Ltd., 2024 BCSC 1856, the court ruled against the employer, finding that a termination clause added after the initial contract was invalid due to a lack of fresh consideration. The employer argued that benefits such as health insurance and paid time off provided fresh consideration, but the court found no direct connection between these benefits and the new termination clause. As a result, the employer was ordered to pay 6 months termination, compared to the minimum of 1 week under the BCESA.

Employers must provide fresh consideration directly tied to the revised or new contract and ensure that all contractual terms are clear and accurately defined to avoid potential invalidation of agreements. The risks associated with lack of consideration can lead to increased liabilities, such as common law notice periods upon termination.

#3: Employers Are Obligated to Investigate Potential Workplace Discrimination

In Metrolinx v. Amalgamated Transit Union, Local 1587, 2024 ONSC 1900, the Ontario Superior Court of Justice affirmed that employers have a responsibility to investigate potential discrimination, even if no formal complaint has been made. This obligation arises when employers become aware of issues through informal reports or direct observations. The court acknowledged that victims of discrimination or harassment may be hesitant to come forward, which makes it crucial for employers to address any concerns that arise.

The court emphasized that employers are required to investigate all complaints, whether formal or informal, including anonymous reports. Failure to perform such investigations could be a violation of both the Human Rights Code and the OHSA. This duty is not merely reactive; it is proactive, requiring employers to take action at the first sign of potential issues.

#4: Ontario Court Upheld ESA-Only Termination Clause

In Bertsch v. Datastealth Inc., 2024 ONSC 5593, the Ontario Superior Court upheld the enforceability of a termination clause limiting an employee’s entitlements to statutory minimums under the ESA. When terminating the employee, the employer offered four weeks’ pay in lieu of notice, exceeding the statutory minimum entitlement of one week. Although the employee argued that the clause was ambiguous and contrary to ESA regulations, particularly regarding exclusions for wilful misconduct, the Court found the clause unambiguous and consistent with the ESA. It dismissed the plaintiff’s claim, reinforcing the enforceability of termination clauses that clearly exclude common law notice entitlements while complying with statutory minimums.

While the enforceability of ESA-only termination clauses remains contentious due to judicial scrutiny, this decision demonstrates that carefully drafted provisions can withstand legal challenges. Termination clauses remain a valuable tool for limiting termination obligations when drafted and applied correctly.

#5: Clarification Regarding Training Periods, Vacation Pay, and Recruitment (Bill 149)

Bill 149, Working for Workers Four Act, 2024 introduced critical changes to the Ontario Employment Standards Act, 2000 (“ESA”).

• Trial workers are employees: Under the new requirements, the meaning of “training” in the definition of “employee” in the ESA includes work performed during a “trial” period. In other words, workers performing “trial shifts” are now defined as employees, with entitlement to ESA rights such as minimum wage, overtime pay, and hours-of-work protections. Employers must document hours worked during trial periods.
• Vacation pay agreements: Employers must draft clear written vacation pay agreements to address disputes concerning lump-sum vacation pay versus pay-period vacation pay.
• Job postings and recruitment: Employers must now include compensation ranges in public job postings and are to disclose the use of AI in the recruitment process. Additionally, requiring “Canadian experience” is prohibited, addressing barriers to employment for newcomers.

#6: Sick Leave Documentation and Maximum ESA Fines (Bill 190)

Bill 190, Working for Workers Five Act, 2024, passed in May 2024 amendments address ESA sick leave claims, ESA violation fines, and potential changes to job posting requirements.

• ESA sick leave documentation: Bill 190 changes the documentation requirements related to ESA sick leave claims to balance employee rights with reasonable standards for evidence. While employers may still require an employee to provide reasonable evidence in certain circumstances, doctor’s notes are no longer mandatory. Additionally, certificates from psychologists are now also accepted as valid documentation.
• ESA maximum fines: ESA violations can now attract a maximum fine of $100,000, the highest in Canada.
• Future amendments for job postings: Amendments still awaiting proclamation will require job postings to clarify whether a position is an existing vacancy. They will also mandate the disclosure of specific information to all applicants interviewed.

#7: Worker Protections Extended to Include Remote Work Environments (Bill 190/OHSA)

Bill 190 proposes further amendments beyond the ESA requirements outlined above to significantly modernize Ontario’s Occupational Health and Safety Act (“OHSA”) to address work environments that increasingly include remote work elements.

Bill 190 clearly states that protections under the OHSA apply to remote workers at home. Employers must set safety standards for these remote workplaces. Additionally, the definitions of “workplace harassment” and “workplace sexual harassment” now include online interactions, making sure that inappropriate behaviour in virtual communications is considered a workplace safety issue.

To address the shift to remote/hybrid work environments, employers can now post health and safety information electronically. Online Joint Health and Safety Committee meetings are also now permitted.

#8: Individual Termination Entitlements For Federally Regulated Employers Take a Graduated Approach

Effective February 1, 2024, the termination entitlements under Part III of the Canada Labour Code (“CLC”) underwent significant changes for federally regulated employers. A new graduated approach to termination notice based on an individual employee’s continuous employment is in effect.

Previously, federal employees with at least three months of continuous employment were entitled to two weeks of termination notice or pay in lieu, regardless of tenure. The new rule for individual termination notice period is as follows:

• 3 months to under 3 years: 2 weeks
• 3 years to under 4 years: 3 weeks
• 4 years to under 5 years: 4 weeks
• 5 years to under 6 years: 5 weeks
• 6 years to under 7 years: 6 weeks
• 7 years to under 8 years: 7 weeks
• 8 years or more: 8 weeks

Employers are also required to provide a benefits statement during individual terminations. This statement must outline the employee’s entitlements, including wages, vacation benefits, severance pay, and other employment-related benefits.

#9: Federally Regulated Employees Have a Right to Disconnect (Bill C-69)

On June 20, 2024, Bill C-69 introduced a right-to-disconnect policy requirement for federally regulated employers, similar to the requirement under Ontario ESA. Employers must establish clear guidelines that limit work-related communication outside scheduled hours. Additionally, these policies must be reviewed and updated every three years. Employers are also required to consult employees when developing or updating these policies. Furthermore, the policies must be posted and distributed to employees, and records of consultations must be retained.

#10: New Leave Entitlements Related to Pregnancy Loss and Adoption/Surrogacy (Bill C-59)

Bill C-59 received royal assent on June 20, 2024, and introduced two leave entitlements under the CLC:

• Pregnancy Loss Leave: Federally regulated employees are entitled to eight weeks of leave for stillbirths and three days for other types of pregnancy loss. If employees have worked continuously for three months, the first three days of this leave will be paid.
• Child Placement Leave: Employees who need to manage responsibilities related to the placement of a child, whether through adoption or surrogacy, will be entitled to a new 16-week leave of absence, similar to maternity leave.

The specific implementation date for these 2 entitlements is to be announced.

#11: Transitioning Rule for Recruiter or Temporary Help Agency License

As of July 1, 2024, recruiters and temporary help agencies require a license to operate.

If an application was received before the deadline, under a transitional rule, agencies and recruiters can keep operating while waiting for the Ministry of Labor (“MOL”) to process the application. The MOL will inform them if their license is granted or denied.

#12: Employers Cannot Terminate Probationary Employees Without Limits

In Sprong v Chinook Lifecare Association, 2024 ABCJ 163, a recent Alberta case, the employer was found to have breached the employment agreement by terminating an employee just five days into her new role without sufficient justification or notice. The court confirmed that common law damages may be awarded even if statutory damages are not applicable, and Alberta’s Employment Standards Code provided that it does not preclude any common law damages. As a result, the employee was granted 2 weeks of notice under common law, even though she was not entitled to any statutory termination notice.

Although this case is specific to Alberta, Canadian employers should understand that terminating probationary employees is not without limits. Employers must give probationary employees a reasonable chance to prove their suitability for the position. Terminations should be based on a fair and honest evaluation, rather than organizational reluctance or external pressures.

Additionally, written agreements are essential to clearly outline probationary terms, expectations, and notice requirements. This helps eliminate ambiguity and minimize legal risks.

#13: New Protection for Gig Workers

The gig economy has exploded in recent years, and some jurisdictions in Canada have finally started to address the vulnerabilities faced by gig workers. Ontario, British Columbia, and the Federal government have all enacted legislations aimed at protecting gig workers in 2024.

Ontario: Digital Platform Workers’ Rights Act

On September 5, 2024, the Ontario government proclaimed that the Digital Platform Workers’ Rights Act, 2022 (“DPWRA”) will come into effect on July 1, 2025, with an aim to protect workers performing digital platform work, such as ride-sharing and delivery services.

Under this act, gig workers have certain rights to ensure fair treatment and transparency. They must be informed within 24 hours about pay calculations, tips, pay periods, and assignment criteria. Additionally, workers are entitled to minimum wage for completed tasks. Written notice is required if a worker is suspended or removed from the platform. The act also includes mechanisms for addressing work-related disputes.

Operators of digital platforms have specific obligations as well. They must establish a regular pay period and payday for workers, maintain worker records for compliance inspections, and provide justifications for suspensions or bans. Compliance officers will oversee the enforcement of the DPWRA, with penalties for violations reaching up to $50,000 for repeat offences and fines up to $100,000 for serious infractions.

British Columbia: Two Types of Gig Workers Are Recognized as Employees

Bill 48 introduced changes to British Columbia’s Employment Standards Act (“BCESA”), recognizing “online platform workers” as employees. It added a new definition of “online platform worker” to the definitions section of the BCESA as “a person who performs prescribed work accepted through an online platform.”

On September 3, 2024, B.C. Reg 140/2024 and B.C. Reg 141/2024, came into force, providing clarity on “prescribed work”:

• Delivery service workers, who are responsible for picking up and delivering online orders.
• Ride-hail service workers, who transport one or more passengers through a ride-hailing online platform.

These two types of “online platform workers” are deemed to be employees and receive protections under the BCESA. These protections include minimum wage, reimbursement for expenses incurred while using a personal vehicle for work, entitlement to tips, provision of wage statements for every pay period, transparency regarding pickup and delivery locations for each assignment, and protections for workers who are suspended or terminated.

One significant distinction between the recent amendments in British Columbia and the legislation in Ontario is that gig workers in Ontario are not recognized as “employees,” while in British Columbia, “online platform workers” are now considered to be “employees.”

Federal: Presumption of Employees

Bill C-69 increases protections for gig workers by strengthening the ban on misclassification. Misclassification means an employee is incorrectly labelled as an independent contractor, which can cause them to lose important rights and benefits.

Now, all workers, including gig workers, are considered employees unless the employer can prove otherwise when their classification is challenged. This means that being an independent contractor will only be seen as an exception in these cases. The employer has the onus to prove that a worker is not an employee.

This new law will make it easier to prove that gig workers are employees, ensuring they have the same rights and protections as other employees in federally regulated sectors. However, it will not affect workers who are legitimate independent contractors.

The above changes from 2024 introduce even more nuance to drafting enforceable employment contracts. Employers must adapt to these changes in 2025 to ensure compliance, minimize risks, and improve employment relations.