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.

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.

It isn’t uncommon for employment to change over time.  You may have received a promotion, or your employer has gone through a restructuring process, or even the nature of the overall business has undergone significant changes, and your role has changed to reflect that. For clarity, most employers will provide a new employment contract outlining any significant new role along with any changes in the employment relationship. A new contract may also be offered even if your role does not change.  If any of this happens, before you sign on the dotted line, it is important to pause, carefully review the document, and ensure you fully understand what you agree to. Here is why.

What if the Contract is Different From What Was Promised?

Whether the new employment contract was expected or not, you might notice discrepancies between what is written in your employment contract and what was verbally represented to you would be your new role or if there is no new role, what your current role entails. If this happens, do not sign immediately. Instead, respectfully but clearly communicate your concerns to the employer. Ask why the terms differ and request adjustments to reflect the initial promises made to you or what reflects your current role.

It is important to note that if your employer made promises in writing (such as via email or text), those communications might legally form part of your contract. A recent BC case, Sui v. HungryPanda Tech Ltd., confirms that email exchanges, under certain circumstances, can actually become legally binding terms of employment.

Did You Receive Consideration for Your Contract Renewal?

Your employer might ask you to sign a new employment contract, replacing your previous agreement. Legally, for a new contract or its terms to be enforceable, “fresh consideration” – something new of value, such as a promotion with a raise, or a bonus for signing this contract, even enhanced benefits, or additional vacation days – must be provided to you in exchange for agreeing to the updated terms. Without fresh consideration, the new contract is not binding on you.

In June 2024, the Court of Appeal confirmed in Giacomodonato v. PearTree Securities Inc. that fresh consideration was required for the new employment contract given to an existing employee. As such, you should ensure that you receive fresh consideration for a new contract, especially if the new contract contains terms that take away rights you have under the old contract.

Do You Fully Understand the Terms of Your Contract?

a. Termination Clause

The termination clause defines what you will receive if your employment is terminated, and sometimes these termination clauses will limit your entitlement to the minimums allowed under employment standards legislation, such as the Employment Standards Act, 2000 (“ESA”) in Ontario.  Adding such a termination clause is often the reason that your employer might ask you to sign a new contract, even if there is no change to your role.  If enforceable, it will limit your termination entitlements to what it provides. Without a termination clause—or if the clause is unenforceable—you are entitled to common law reasonable notice, often significantly more generous than ESA minimums. Understanding this distinction is critical, as it can substantially impact your financial security if your employment is terminated unexpectedly.

b. Compensation and Benefits

In addition to salary (wages), there might be contractual benefits such as group benefits, bonuses, stock options, RSUs, etc. Understand how these benefits are calculated and how often they are paid out.

According to Matthews v. Ocean Nutrition Canada Ltd., confirmed by the Supreme Court of Canada in 2020, if you are terminated without just cause, you are entitled to compensation equivalent to what you would have earned during the reasonable notice period, including your contractual benefits, unless there is language directly excluding that entitlement.

Therefore, pay particular attention to any “exclusion clauses” that might explicitly state that specific benefits or compensation elements, like bonuses or equity incentives, are excluded from your termination entitlements. This could significantly affect your severance package if your employment is terminated.

c. Restrictive Covenants

Restrictive covenants generally include confidentiality agreements, non-competition clauses, and non-solicitation agreements.

• Confidentiality: Usually, confidentiality clauses are required to protect the employer’s sensitive information and prohibit disclosure, except with the employer’s permission or as required by law.
• Non-competition: Non-competition clauses limit your ability to work for competitors, typically within a defined time and geographic area. However, in Ontario, non-competition clauses entered into after October 25, 2021, are no longer enforceable under the ESA, with the two exceptions for executives and the sellers of businesses.
• Non-solicitation: Non-solicitation clauses prohibit you from soliciting the clients or employees of your former employer for your own benefit or the benefit of someone else.  To be enforceable, these clauses must have a reasonable definite duration.

Consult a lawyer to fully understand these provisions, ensuring you do not inadvertently agree to overly restrictive terms that might hinder your future career opportunities.

Final Thoughts

Receiving a new employment contract can provide clarity in your role at a company, but it can also create questions. Do not rush into signing without fully understanding its terms. If you are uncertain about any aspect, seeking legal advice can clarify your obligations and rights.

Entering into a new contract as an employee may appear routine, but the legal framework governing employment agreements is intricate and can have substantial consequences if not managed properly. This is highlighted in a recent case, Giacomodonato v. PearTree Securities Inc. (2024), where an employee was terminated after he signed a new contract. He claimed that he was owed unpaid compensation and wrongful dismissal damages in an amount between $3.194 million and $3.927 million under the old contract, while the employer argued that the amount should be somewhere between $240,000 and $627,516 under the new contract. Let’s look into this cautionary tale: never sign onto a new contract with changed terms of employment without understanding what the changes mean.

Will the New or Old Contract Stand Up In Court?

Davide Giacomodonato was a successful investment banker. He was recruited by PearTree Financial Services and PearTree Securities Inc. (“PearTree”) to serve as President and Co-Head of Banking. His first employment contract was signed in April 2016. By July 2016, the parties had negotiated and agreed to a second employment contract.

An important part of Giacomodonato’s compensation is a variable payout, which is an incentive calculated as a certain percentage of PearTree’s revenue. Under the second contract, the variable payout was reduced by 25% due to the departure of another executive of PearTree. The new contract also included a valid termination clause allowing PearTree to dismiss him without cause any time after September 30, 2017, by providing him with salary continuance until July 10, 2018, while the first contract does not include such a termination clause.

In January 2018, PearTree relied on the second contract and terminated Giacomodonato’s employment without cause. Giacomodonato sued for wrongful dismissal, claiming that his entitlements should be based on the more favourable terms of the first contract.

Whether the first or the second contract governed became one of the focal points of this legal battle. The trial judge disagreed with Giacomodonato and applied the second contract. The Court of Appeal upheld this decision, stating that the second contract was valid and enforceable due to the presence of “fresh consideration”.

What Does “Fresh Consideration” Mean?

In legalese, “consideration” refers to something of value that is exchanged between parties entering into a contract. Without consideration, a contract is not legally binding. Importantly, when an existing employment contract is modified or replaced, the employer must provide “fresh consideration” to the employee.

In this Giacomodonato case, the trial judge found that the second contract was supported by fresh consideration, including a $40,000 payment to cover costs associated with leaving his previous employer and an additional two weeks of paid vacation. The trial judge determined that these new benefits were sufficient to validate the second contract, which was upheld by the appellate court.

Do Courts Look Into the Adequacy of the Consideration?

The trial judge also recognized the inherent power imbalance in employer-employee relationships. Employees often depend on their jobs for financial stability, making them vulnerable during contract negotiations.

However, courts do not look into the adequacy of the consideration exchanged when determining whether the new contract is binding. In simpler terms, the courts typically refrain from directly comparing the value of the consideration with the employee’s reduction in benefits. As the trial judge stated:

“Courts ensure that there is consideration for the contract, but the court is not concerned with the adequacy of the consideration. As long as there is some consideration for the amendments to the contract, the court leaves it to the parties to form their own judgment over its adequacy and to make their own bargain. The law does not require that the new benefits be in the form of money, or that the economic value of the new benefits provided to the employee equal or exceed the economic cost of the new terms of the agreement.”

Additionally, the trial judge identified several mitigating factors in this case:

• Access to Information: Giacomodonato possessed substantial knowledge about PearTree’s operations.
• Experience in Negotiation: Giacomodonato had previous experience negotiating contracts.
• Representation by Counsel: Giacomodonato was legally represented throughout the process of negotiation of the second contract.

These factors influenced the court’s determination that the second contract was fair, despite the usual power imbalance in employment relationships.

It is Important to Get a Comprehensive Evaluation of Your New Contract

The Giacomodonato case serves as a stark reminder that signing a new employment contract is not a mere formality – the new contract may substantially affect an employee’s rights.  The fresh consideration offered may be significantly less than the disadvantages of the new terms. As such, employees must approach the offer of new contracts during the course of their employment with diligence and caution. When presented with a new contract, employees should:

• Understand the Fresh Consideration: Find out whether there are any new terms that come with clear, tangible benefits beyond continued employment, to determine whether there is fresh consideration to make the new contract binding.
• Compare Contracts: Carefully compare the new contract with the previous one to assess the overall advantages and disadvantages. Ensure that the advantages outweigh the disadvantages before signing. In particular, as was critical in the Giacomodonato case, look to see what the termination clauses say.
• Seek Legal Advice: Given the complexity of employment law, consulting with a lawyer can provide critical insights and protect your interests.

Too often, employers are surprised when their “perfectly drafted” employment contracts become obsolete at critical moments, resulting in unexpected costs or even legal disputes. Unlike other long-term commercial contracts, which are updated only when parties modify their deals, employment contracts require routine reviews to remain enforceable. Otherwise, the contracts, on which employers spent time and often legal fees, may fail to protect them or, worse, become a source of liability.

When reviewing employment contracts, employers need to consider several factors.

Has the nature of employment changed?

The nature of employment may have fundamentally changed, necessitating a new contract. For example, an employee’s job description may evolve to the point that they can argue, “The current job I am working on is so different from the one when I signed the employment contract, so the contract is obsolete.” In Celestini v. Shoplogix Inc., 2023 ONCA 131, the Ontario Court of Appeal upheld the motion judge’s decision that significant changes in an employee’s job responsibilities and compensation structure rendered the 12-year-old employment contract unenforceable. Consequently, the employee received 18 months of wrongful dismissal damages under common law instead of the 12-month termination notice stipulated in the contract. This resulted in an award of over $421,000 (later increased by over $37,000 due to another issue). This outcome could have been avoided if the employer had periodically updated the contract and spent a tiny fraction of the awarded damages on it. This could also play out in reverse. For example, if an employee is promoted to a supervisory position where overtime premium pay is no longer mandatory under the Employment Standards Act, 2000 (“ESA”), an outdated contract entitling them to overtime pay could lead to substantial overtime claims if accumulated over time.

Have there been significant employment law changes?

Even if the position remains the same, changes in the law can render a previously solid contract unenforceable, often leading to wrongful dismissal disputes. Many employers understand that a valid termination clause is crucial for limiting termination costs and reducing disputes. However, courts closely scrutinize termination clauses, and doubts about their enforceability are generally decided in favour of the employee.

Are your termination clauses invalid?

In Waksdale v. Swegon North America Inc., 2020 ONCA 391 the Court of Appeal confirmed that an invalid part of a termination clause invalidates the entire clause, regardless of whether the employer relies on it. In this case, the employer could not enforce the termination without cause provision because the termination for cause provision was invalid, entitling the employee to common law reasonable notice instead of the contractual ESA minimum termination notice period. Before this decision, people rarely paid attention to their termination for cause provision, and a significant percentage of them were unenforceable.

Similarly, in 2024, the decision of Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 provided employees with new grounds to challenge termination clauses. The court ruled that termination clauses allowing employers to terminate employees “at any time” or at the employer’s “sole discretion” are unenforceable since they contravene laws such as protecting employees during job-protected leaves, and, thus, the employee may be entitled to common law notice. This invalidates many termination clauses as “at any time” or “at sole discretion” are common fillers for contract languages, which people frequently use in termination clauses. In Dufault, the employee had a fixed-term contract, and the employer terminated her without cause, while the balance of the contract still had 101 weeks. The employer tried to rely on the termination clause. However, the termination clause was unenforceable for reasons including the ones mentioned above. As a result, the employee received the balance of her fixed-term contract—101 weeks—totalling over $157,000 plus interest and costs.

Following these decisions, employment contracts need prompt updates to prevent increased costs and legal disputes related to termination.

Do you include non-compete agreements?

Additionally, other contract clauses may be affected by legislative changes. For example, the Ontario legislature banned non-compete agreements under most circumstances in employment contracts entered into on or after October 25, 2021. Employers using outdated templates with non-compete clauses should update their contracts to include other restrictive covenants, such as non-solicitation clauses, to protect them. Otherwise, former employees might poach customers, suppliers, and employees to start competing businesses without worrying about recourse under the old contracts.

In summary, employers should review employment contracts routinely, at least once a year. Not every review will necessitate a formal update, and some updates can be simple fixes handled swiftly by experienced employment counsel at minimal cost. Employers will find this money well spent or regret not doing so.

Employers face many challenges and responsibilities in running a successful business, not the least of which is the optimum management of their human resources. In this article, we identify the top 10 errors we have seen employers make and how the costly consequences can be avoided. While this article focuses on workplaces in Ontario, this advice generally applies to other common law jurisdictions in Canada.

Error 1: Not having written employment contracts

There is no legal requirement for written employment contracts. However, having them can prevent legal conflicts, safeguard employers’ interests, and reduce liabilities. Including clauses like temporary layoff rights, specifying resignation notice periods, termination pay calculation, and restrictive covenants (like confidentiality and non-competition agreements) can significantly reduce possibilities of common litigations arising from unclear or absent contractual terms.

Failing to have written contracts can lead to increased disputes and less protection for employers. For example, wrongful dismissal is one of the most litigated disputes in employment law, and it is usually caused by not having a written contract with an enforceable termination clause. Many employers are often surprised by the significant amount of termination pay they owe to their employees and frustrated to learn that the common law does not provide a simple mathematical formula to ensure certainty in advance. Any uncertainty could be avoided by having a written contract with an enforceable termination clause.

Error 2: Using Google or AI to create your employment contracts

While it is advisable to have written employment contracts, some employers are tempted to cut legal costs by using pre-made employment contract templates sourced from the internet or generated by artificial intelligence (“AI”).  However, rather than saving time and money, this can be a risky and costly mistake that can have serious consequences.

Employment contracts in Canada have to take into consideration relevant employment-related legislation, otherwise the contract could be unenforceable. Relying on pre-made employment contract templates sourced from the internet or generated by AI will almost certainly mean that the contracts will not align with current legal standards.

As such, these templates may not help employers achieve the goals of having written contracts but introduce an unwarranted risk of non-compliance with employment laws, potentially resulting in additional costs.

Error 3: Not revising contracts or reviewing them every year

Employment laws are not static or immutable. Therefore, it is important for employers to review and revise employment contracts regularly, at least once a year, to ensure that they are up-to-date and compliant with the current legal standards.

A notable example in Ontario is the Waksdale v. Swegon North America Inc., 2020 ONCA 391, decision by the Ontario Court of Appeal, which held that if one part of a termination clause is invalid, the entire clause is invalid, regardless of whether the employee was terminated with or without cause.

This means most contracts in Ontario drafted prior to the Waksdale decision – and any following that fail to take the decision into consideration – are unenforceable. As a result, employers may have to pay more severance than expected. Failure to conduct periodic reviews may lead employers to discover, to their surprise, that they are now obligated to provide significantly higher termination pay than previously anticipated.

Error 4: Not having customized restrictive covenants

Restrictive covenants are clauses that limit the actions of an employee after they leave the employer, such as non-solicitation clauses and non-compete clauses. Non-solicitation clauses prevent the employee from soliciting the employer’s clients, suppliers, or other employees for a certain period of time. Non-compete clauses, which are generally not enforceable, prevent the employee from working for a competitor or starting a competing business in a certain geographic area for a certain period of time.

Restrictive covenants are considered a restraint of trade, which means they interfere with the employee’s freedom to work and the public’s interest in fair competition. Further, in Ontario, non-competition clauses between employers and employees are prohibited in any contract signed after October 25, 2021,  with only two exceptions. The first exception regards the sale (or lease) of a business. Non-compete agreements between the seller and purchaser may be allowed as a part of the sale where the seller becomes an employee of the purchaser immediately thereafter. The second exception is that a non-compete agreement is not prohibited between an employer and its executives.

To be enforceable, both non-solicitation clauses, and non-compete clauses where permitted, must be no broader than necessary to protect the employer’s legitimate business interests. They must also be clear, specific, and narrowly tailored to the business and the employee’s position and role with the employer. They must be reasonable in terms of duration, scope, or geography, sufficient to protect the legitimate business interests and no more. Therefore, the court will not enforce them unless and “only if it is reasonable between the parties and with reference to the public interest,” as elicited by the Ontario Court of Appeal in H.L. Staebler Company Limited v. Allan, 2008 ONCA 576 at para 33.

If these clauses are not customized according to these factors, the court may refuse to enforce them. As a result, the employer will not have the protection it wants, creating significant risks, as these employees could take away its clients or business.

Error 5:  Laying off employees without contractual right to do so

Employers do not have an inherent right to temporarily lay off employees when facing a business downturn or other challenges. Usually, this right must be created by a temporary layoff clause in a written employment contract.  Otherwise, a temporary layoff might entitle the employee to claim constructive dismissal, treat their employment as terminated, and claim damages for wrongful dismissal.  Many employees successfully sued their employers during the pandemic when they were laid off in this manner.

For example, in Michalski v Cima Canada Inc., 2016 ONSC 1925, the trial judge found that, in the absence of a temporary layoff clause in the contract, the employer had constructively dismissed the employee. Although the employer tried to call back the employee five months later, the court nevertheless ordered the employer to pay the employee for loss of income incurred during the 5-month layoff period, which resulted in damages of over $33,000 plus interest.

Error 6: Not complying with the ESA

Some employers may think that they have unconstrained freedom of contract regarding employment agreements. However, they should be aware that there is both federal and  provincial and territorial  employment standards legislation in Canada that sets out the minimum standards for most employees and employers, with government enforcement of their provisions. In Ontario, this is the Employment Standards Act, 2000 (“ESA”), and enforcement is done through the Ministry of Labour, Immigration, Training and Skills Development (“Ministry”). Any provision in a contract that violates employment standards legislation is invalid and unenforceable.

For example, in one of the common areas where employers fail to comply with the ESA is the payment of wages. The ESA establishes the minimum wage, overtime pay, public holiday pay, vacation pay, and other employee entitlements. If an employer’s contract provides for pay that is less than the minimum wage, or overtime pay or other benefits less than the ESA’s requirement, the employer may face serious consequences.

In Ontario, an employee who is paid below the minimum wage or denied overtime pay can file a complaint with the Ministry. The Ministry can order the employer to pay the employee the amount owed, plus interest and a penalty under ss.113 and 125.2 of the ESA.   For some infractions or multiple infractions, the employer may also be prosecuted and fined up to $500,000 or even imprisoned under s.132 of the ESA.

Error 7: Not respecting Human Rights legislation

Employers have a legal obligation to respect the human rights of their employees and to accommodate their needs based on the protected grounds, such as under Ontario’s  Human Rights Code (“Code”).  Like similar legislation passed by federal and all other provincial and territorial legislatures, the Code prohibits discrimination and harassment in employment on the basis of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability. Failure to comply with the Code may expose the employer to significant liability and damages.

For example, in Ontario, if an employee is terminated as a result of discrimination, they may start a legal proceeding before the Human Rights Tribunal of Ontario or the court to address the discrimination. The various remedies could be available, such as reinstatement, back pay, and compensation for injury to dignity, feelings, and self-respect. The Code also enables public interest remedies, such as ordering employers to make policy changes and providing training or education.

In Valiquette v. BPM Enterprises Ltd. (Tim Horton’s), 2023 HRTO 53, the Human Rights Tribunal of Ontario found the employer failed to accommodate the employee’s non-work related injuries and terminated her accordingly, and thus, discriminated against the employee on the ground of disability. The Tribunal found that this violated the employee’s rights under the Code and ordered the employer to pay her $20,000 for injury to dignity, feelings, and self-respect and $15,290.40 for her lost wages.

Error 8: Terminating Employees for cause without justification

Not every misconduct or poor performance can justify a termination for cause, without notice or pay in lieu of notice. In fact, the courts have set a high bar for employers to meet in order to avoid paying any severance to a dismissed employee.

Under the common law, employers may terminate an employee for cause when the employee “has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship”, as stated recently in  Render v. ThyssenKrupp Elevator (Canada) Limited (“Render”).  Examples of cause could include theft, fraud, dishonesty, violence, insubordination, and chronic absenteeism.

In Ontario, because of the requirements of its ESA, the employer may only terminate an employee without any notice or pay in lieu of notice if the employee has engaged in wilful misconduct, which is a higher standard than common law cause (as discussed in Render). Section 2(1) of Termination and Severance of Employment, O Reg 288/01 provides that an employee may be terminated without notice or pay in lieu of notice if  “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”  Hence, absent wilful misconduct,  an employer might still have to pay the minimum notice or pay in lieu required by the ESA if common law cause has been proven.  This distinction is not that clear to employers.

Employers who carelessly terminate an employee “for cause” or “wilful misconduct”, and cannot justify that termination, could face significant risks and consequences.  If the court finds that there was no common law cause (or wilful misconduct), the employer may have to pay damages for bad faith, aggravated damages, or punitive damages on top of wrongful dismissal damages the employee would be entitled to had they terminated without cause.

In Galea v. Wal-Mart Canada Corp., 2017 ONSC 245, the employee was a senior executive who had worked for the employer for over 10 years. The high-handed actions of the employer cost them $750,000 in damages. She was terminated for cause without any notice or severance, and the employer alleged that she had engaged in misconduct, such as dishonesty, fraud, and breach of fiduciary duty. However, the employer failed to provide any evidence to support its allegations, and the court found that the termination was wrongful and without cause. The court also found that the employer had acted in bad faith, by making false accusations, delaying the payment of her entitlements, and mistreating her during and after the termination. The court awarded the employee damages for wrongful dismissal based on a 24-month notice period, as well as $250,000 for aggravated damages and $500,000 for punitive damages. The court stated that the employer’s conduct was “callous, high-handed, insensitive and reprehensible”, and that the punitive damages were necessary to denounce and deter such behaviour.

Error 9: Misclassifying an employee as an independent contractor

Many employers may be tempted to hire workers as independent contractors rather than employees, thinking that it will save them money and hassle such as avoiding overtime pay or deducting tax, EI premium, and CPP from payroll. However, this can be a costly mistake if the workers are actually employees due to the nature of their working arrangement. Hiring independent contractors is not a way for employers to avoid the obligations and liabilities that come with hiring employees.

Workers can be classified as an employee, a dependent contractor, or an independent contractor.  As explained by the Ministry of Labour and Keenan v. Canac Kitchens, 2015 ONSC 1055, a worker’s legal status is determined by actual reality of the working relationship. The main difference between an employee and an independent contractor is the degree of control that the employer has over the worker. A dependent contractor falls somewhere in the middle.

An employee misclassified as an independent contractor could lead to significant liability to the employer. These liabilities could include failure to meet obligations under the ESA, possibly the common law, as well as for failure to take deductions and make remittances to the government. This could lead to serious and costly consequences.

For example, the employer may have to pay the employee in accordance with the ESA, including overtime pay, vacation pay, and holiday pay.  If the improperly classified independent contractor was terminated, the employer could be liable at the very least to ESA termination and severance pay, or,  more likely, significant liability for common law reasonable notice or pay in lieu.  On top of that, there could also be liability to the CRA, including fines and penalties, for failure to deduct and remit payments for tax, EI and CPP.

This is especially important to consider when considering potential risks within the gig economy.

Error 10: Improper handling of employee harassment complaints

Harassment in the workplace is a serious issue that can have negative consequences for both employees and employers. Harassment can create a toxic work environment, lower productivity and morale, damage the employer’s reputation, and expose the employer to legal liabilities. Therefore, not handling employee complaints of harassment properly could lead to multiple layers of liabilities for the employer.

The employer could be liable for the harassment under certain circumstances. For example, if the harasser is a manager, who is a directing mind of the employer, the employer could be directly liable for the manager’s harassment. The employer could also be liable for failing to prevent or stop the harassment or retaliating against the complainant.

Workplace Investigation: Under certain circumstances, (i) the employer has to conduct a workplace investigation into the harassment complaints, and (ii) the investigation has to be done properly.

If the employer fails to conduct a workplace investigation at all, it could be forced by the labour board to conduct an expensive workplace investigation. This could involve hiring an external investigator to interview witnesses, collect evidence, and produce a report. The investigation could also disrupt the normal operations of the workplace and cause further stress and conflict among the employees.

In addition, if the employer fails to conduct the investigation properly, it could also face bad faith and moral damages. For example, in Rutledge v Markhaven Inc., 2022 ONSC 3183, the court ordered bad faith and moral damages in the amount of $50,000 against the employer, partly because, as the court explained (at paragraph 44), (i) the investigation was not by “an independent third party” as the employer informed the employee; (ii) the investigator obtained information from the employee without her prior knowledge; and (iii) no reasonable or prudent steps were taken during the course of the investigation to keep the matter confidential.

Constructive Dismissal and Damages: The employer could face a constructive dismissal claim from the complainant, who could argue that the employer breached their duty of good faith. In Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 (at paragraph 82), the Supreme Court of Canada clarified that the employer’s duty of good faith includes the obligation to “safeguard employees from bullying, intimidation, and harassment initiated by managers. The complainant could also seek aggravated or punitive damages for the emotional distress and humiliation caused by the harassment and the employer’s inaction. In Humphrey v. Mene, 2021 ONSC 2539 (at para 180), the employer was ordered to pay $50,000 in aggravated damages and other damages and liabilities for breaching the duty of good faith.

Navigating employment law matters in the workplace requires vigilance and a proactive approach. By addressing these top 10 errors, employers can mitigate legal risks, manage financial exposure from employment disputes, and ultimately contribute to the success and sustainability of their business.

If you have been fired from your job, you may face difficulties in receiving the severance and termination pay you are entitled to. Some employers may pressure employees to accept much less than what they are owed. However, there are two significant trends that terminated employees should be aware of, as they may increase the amount of termination damages awarded in some cases. First, it has become easier for employees to prove exceptional circumstances to justify their entitlement beyond the usual 24-month limit. Also, courts are now awarding significant moral and punitive damages for employers’ bad-faith behaviours, encouraging employees to stand up against unfair treatment.

Are courts extending the limits of termination pay?

When an employee is entitled to common law reasonable notice, their entitlement is calculated by taking into account various factors known as the “Bardal Factors.” These factors help to determine an employee’s entitlement to common law notice and its length.

In Ontario, the maximum notice period for a terminated employee is usually 24 months, no matter how long an employee has been employed. This was reaffirmed by the Ontario Court of Appeal (“ONCA”) in 2019 in Dawe v. The Equitable Life Insurance Company of Canada (2019). The employee in question was a senior vice president who had been working at Equitable Life for 37 years. At the time of his dismissal, he was 62 years old. At trial, the judge determined the reasonable notice period to be 30 months. However, the ONCA reduced the trial judge’s initial decision to 24 months, holding that only “exceptional circumstances” could justify a reasonable notice period exceeding 24 months. No guidance was provided for what might constitute “exceptional circumstances.”

In the years following, we started to see a trend toward recognizing “exceptional circumstances.”  In early 2023, the Ontario Superior Court of Justice (“ONSC”) found “exceptional circumstances” in Milwid v. IBM Canada Ltd. (2023), and gave judgment to the employee based on a 26-month reasonable notice period. The exceptional circumstances included the employee’s age, long service with the company, the exclusivity of his employment, the specialized nature of his work and the overall character of his employment. Although the ONSC refused to consider COVID-19 as an exceptional circumstance, due to the timing of the employee’s termination coinciding with the pandemic, the employee was granted an additional month of notice, for a total of 27 months. This decision was upheld by the ONCA.

Late last year, the ONCA also upheld another ONSC decision where the employee was granted 30 months’ notice (Lynch v. Avaya Canada Corporation (2023).  In this case, the finding of “exceptional circumstances” was supported by the employee’s highly specialized skill set, the employee’s significant contributions, and the lack of comparable employment.

While these two cases do not explicitly define what qualifies as “exceptional circumstances,” they suggest that such circumstances may not necessarily fall outside the established Bardal Factors. Including pandemic-related factors and an employee’s contributions as supporting elements for “exceptional circumstances” implies a broader judicial interpretation. This trend appears to indicate growing flexibility among judges in exercising their discretion to identify and acknowledge unique situations that warrant a notice period exceeding the standard cap of 24 months.

This trend could signal a potentially more accessible pathway to establishing “exceptional circumstances” and securing extended notice periods for long-serving employees.

 

Are courts more and more generous when granting moral/punitive damages and costs?

Recently, judges appear to have less and less tolerance for employers who mistreat their employees.

Pre-termination Conduct

An employer’s pre-termination conduct may result in moral and/or punitive damages. In the case of Osmani v. Universal Structural Restorations Ltd. (2022), an employee was harassed and assaulted by his supervisor over a prolonged period, resulting in severe injuries. Furthermore, the employer produced a misleading investigation report and interfered with the employee’s ability to apply for WSIB. Upon the employee’s return to work, the employer assigned tasks that exceeded his physical capacity and placed him with the same supervisor.

The ONSC opined the employer’s abusive conduct was “malicious, oppressive and high-handed” and ordered the employer to pay moral damages of $75,000 plus punitive damages of $25,000, for a total of $100,000. Additionally, the court awarded an additional $50,000 for the employer’s violation of the Ontario Human Rights Code, because the abusive conduct was related to the prohibited grounds. For a more detailed discussion, please see our article, What Are the Standards that Employers Are Responsible for When It Comes to Harassment.

 

Bad-faith Termination

In Teljeur v. Aurora Hotel Group (2023), the ONSC granted moral damages for the employer’s bad faith during the course of termination. The employer failed to provide written notice of termination or pay in lieu of notice and refused to reimburse the employee’s out-of-pocket expenses, which are mandatory under the Ontario Employment Standards Act, 2000. Additionally, the employer induced the employee to resign and made a misrepresentation about the termination payment by assuring an 8-week severance, but in fact, only paid three weeks of salary. As a result, the ONSC awarded the employee $15,000 as moral damages.

In British Columbia, Chu v China Southern Airlines Company Limited (2023), the court granted the employee $150,000 moral and punitive damages, resulting from the employer’s aggressive “hardball” tactics during the course of termination.

Similarly, in Janmohamed v. Dr. M. Zia Medicine Professional Corporation (2022), when terminating the employee, the employer failed to provide a severance package aligned with the employee’s entitlement, resulting in the lawsuit. The employer was ordered to pay $30,000 in legal costs, twice the amount the employer had previously agreed to pay as settlement. In its reasoning, the court states, “Employers should not be incentivized to low-ball and then force a plaintiff to sue to obtain what everyone knows is justly due. Costs and delay are horrible risks to a plaintiff who finds herself sitting at home having to spend thousands of dollars, while unemployed and vulnerable, to chase money that is obviously due from a well-funded employer.”

 

Post-termination Conduct

An employer’s bad-faith behaviour after the termination may also justify awarding significant legal costs to the employee during litigation. In Giacomodonato v. PearTree Securities Inc. (2023), the employee was fired from his position as President and Co-head of Banking after just over a year. The employee sued for wrongful dismissal. During the litigation, the employer counterclaimed for breach of non-compete, claiming $1,599,000 in damages and $1 million in punitive damages from the employee, but then abandoned the counterclaim. The employer also delayed the document disclosure and failed to pay the employee money that was admitted to being owed after termination. The parties went through a 10-day trial.

The court found that the employer’s counterclaim was clearly meritless, and that it was a suitable case to award costs to discourage frivolous and strategic claims. Employers who owe money to employees should be discouraged from engaging in tactical litigation that is intended to discourage employees from pursuing their rights and entitlements. The court also found it was an appropriate case to award costs to sanction inappropriate behaviour by the employer in its conduct of delaying the proceeding.

As a result, the employee was awarded $830,761.75 in legal costs, in addition to the award of wrongful dismissal damages of $718,103.05.

Conclusion

The increasing willingness to extend reasonable notice limits and award moral/punitive damages signals a movement toward better employee protection. The lower threshold to establish “exceptional circumstances” for extended notice periods shows judges may be more willing to see the uniqueness in employee situations. There is also less tolerance for workplace abuse, such as bullying, harassment, and violence leading up to termination. Courts may also compensate employees for their employers’ bad faith behaviour during or after termination by awarding moral/punitive damages or significant legal costs. These developments signify a changing legal environment that encourages employees to assert their rights confidently and seek justice without apprehension.

As an employee, it is important to understand how your contractual benefits work in wrongful termination cases. Recent developments in Canadian employment law have brought attention to this issue, and it can have significant financial consequences for employees, especially those in executive positions. In one case, the court awarded an employee a bonus of over $1 million under a long-term incentive plan. In another case, the court granted the employee travel privileges valued over $1.8 million. If you are not aware of your entitlements, you could be leaving a lot of money on the table during negotiations if your employer has not structured your severance package correctly.

What Counts as Contractual Benefits?

Contractual benefits generally include the financial payments and non-monetary benefits provided to an employee on top of their base salary. For executives, contractual benefits often include short-term bonuses, long-term incentive plans (“LTIPs”), and other benefits such as stock options or RSUs. In many wrongful dismissal cases, employees often wonder if their bonuses should be paid out as part of severance package calculations. The answer to that is often yes.

In O’Reilly v. IMAX Corporation, 2019 ONCA 991 (“O’Reilly”), the Ontario Court of Appeal stated that contractual benefits include “pension benefits, bonuses, stock options, or other incentives.”

Sometimes, contractual benefits may include privileges like a company car, a business-paid cellphone, and, at the highest level, access to private travel by rented or owned jet. For example, in Ruel v. Air Canada, 2022 ONSC 1779 (“Ruel”), the Ontario Superior Court confirmed that the flight passes or travel privileges of the plaintiff, who was an executive of Air Canada, would fall with the rubric of “other incentives.”

Legal Framework

In the landmark case of Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 (“Matthews”), the Supreme Court of Canada (“SCC”) affirmed a pivotal doctrine: in the event of an employee’s termination without just cause, that employee is entitled to compensation equivalent to what they would have earned during the notice period, including contractual benefits, unless there is language unambiguously excluding that entitlement.

For employees to claim these contractual benefits during the reasonable notice period, two prerequisites need to be considered under the Matthews framework:

1. Would the employee have been entitled to contractual benefits as part of their compensation during the reasonable notice period?

The SCC confirmed the first arm of the test set out in Paquette v. TeraGo Networks Inc., 2016 ONCA 618 (“Paquette”), with some modifications. It agreed with the Ontario Court of Appeal that “courts should examine whether, but for the termination, the employee would have been entitled to the bonus during the reasonable notice period.”

In favour of the employee, the SCC found that the “integral” test in Paquette is not required in every situation, especially when the benefits are not discretionary. For instance, if the realization event of an LTIP occurs during the reasonable notice period, the LTIP payment is assumed “integral” to his compensation because it is not based on the employer’s discretion.

Courts should only assess whether the benefits are “an integral part” of the employee’s overall compensation in cases where they are discretionary, similar to Paquette.

In other words, if the realization event, such as the maturity date, falls within the reasonable notice period, an employee can say that satisfies the first arm of the test.

2. If yes, do the terms of the employment contract or incentive plan unambiguously take away or limit that right?

The SCC confirmed the second arm of the Paquette test. That is, whether the terms of the employment contract or incentive plan clearly limit or remove that common law right. Courts always interpret the terms in favour of employees.

The SCC noted that only using the terms such as “full-time” or “active” does not remove an employee’s common law right to damages for loss of bonus/incentives, because the employment contract is not considered “terminated” for calculating wrongful dismissal damages until after the reasonable notice period. If the employee had received adequate notice, they would have been actively employed full-time during the reasonable notice period. As such, even if the clause explicitly refers to an “unlawful termination,” it still will not clearly and unambiguously affect the employee’s common law entitlement.

Further, in O’Reilly, the Ontario Court of Appeal held that the simple term “termination for any reason” does not unambiguously take away the employee’s entitlement to contractual benefits upon wrongful dismissal. Similarly, simple language like “termination with or without cause” does not exclude an employee’s entitlement to benefits.

In other words, “unambiguity” means that the exclusion or limiting clauses must be very detailed to clearly cover every circumstance that may lead to the end of an employment relationship. Employees should receive all contractual benefits absent such an unambiguous exclusion clause.

Stock Options and Restricted Stock Units

When it comes to stock options or Restricted Stock Units (“RSUs”), things can be more complex since the concepts of “granting” “vesting”, and “exercising” can be confusing to employees.

When employees are granted either stock options or RSUs, it does not mean they obtain ownership immediately of any shares or cash in lieu. Employees do not own either until they are vested. Typically, they vest in tranches over a period of time, such as 25% per year over four years.  Once stock options are vested, an employee has the right to “exercise” the vested options by purchasing shares at a pre-determined price (of great value if the business is doing well and the stock price is rising).  In contrast, once an RSU is vested, the employee is usually paid out in shares, without having to purchase them, or provided with a cash amount pegged to the price of shares, depending on the RSU plan’s terms.

For employees fighting wrongful dismissal cases involving stock options or RSUs, the key is examining the language used in the plans. Specifically, they need to see if the exclusion clause unambiguously restricts or eliminates the stock options or the RSUs from being vested during the reasonable notice period. If it does not, the employee likely has the right to continue the vesting process even after termination.

Conclusion

Employees are generally entitled to nondiscretionary contractual benefits during the common law notice period, unless their employment contracts or bonus/incentive plans clearly and unambiguously limit or remove the entitlement.

The intricate legal interplay between wrongful dismissal cases and contractual benefits, like bonuses, incentives, stock options, and RSUs, underscores the necessity of understanding how courts have looked at employees’ termination entitlements and the importance of carefully examining the contractual language. In navigating the complexities of contractual benefits, employment documents and termination packages, employees are strongly advised to engage legal counsel to ensure their rights and entitlements are safeguarded.

Losing your job can be devastating and overwhelming.  But right after you lose your job, there are steps you can take to make that might lessen that devastation. Here are some tips for Ontario employees to navigate that difficult period right after being terminated, including what to do and what to avoid.

What to Do:

Consult a Lawyer before You Sign Anything.

You will have received something in writing terminating your employment and offering you a severance package. You may have been asked to sign a release before receiving some or all of that package. You should seek legal advice before signing anything because the package offered to you might be less than what you are legally entitled to.  An experienced lawyer can carefully review your package, look at any written employment agreement you have, and give you peace of mind that you are not being short-changed on your termination pay entitlement, and help you understand the implications of any release or other agreement you might be asked to sign. Taking this initial step can be the “linchpin” in securing a fair resolution to your termination.

Understand Your Rights and Check Your Employment Contract.

If terminated without cause, by default, you are entitled to common law reasonable notice. However, you might be entitled to significantly less if there is an enforceable employment agreement that limits your entitlements to Ontario’s Employment Standards Act, 2000 (“ESA”). The ESA sets minimum standards for termination notice that must be provided to you.

If there is no written employment contract or offer, you are most likely entitled to the common law reasonable notice. For long-term employees, up to 2 years compensation, and sometimes more in exceptional circumstances, may be owed. Entitlements under the common law are generally much more than the ESA minimum standards, sometimes about four times more.

Fired for Cause?

If you are terminated for just cause, you may not be entitled to common law reasonable notice but could still be eligible for ESA minimum payments.

Wilful misconduct, which is more severe than just cause, disqualifies employees from receiving both ESA and common law notice. You may face termination without any compensation if you are guilty of wilful misconduct. This includes disobedience, wilful neglect, or serious misconduct that is not trivial and has not been condoned by the employer.

Employers may sometimes allege just cause or wilful misconduct to avoid paying termination pay. In many cases, these allegations can be challenged and reversed. If you find yourself in either scenario, it is advisable to seek legal advice promptly to understand your right to termination pay. Consulting with an employment lawyer can help you understand your rights regarding termination pay and navigate the legal aspects of your situation.

Assess, Calculate and Negotiate.

If you are entitled to common law reasonable notice, your entitlement is calculated based on what is referred to as the Bardal Factors that is your age, length of service, characteristics of the position, and availability of similar employment, but also other factors that are relevant to your situation.  For instance, if you have worked as a senior manager for over 5 years, are 60 years old, and there are very limited opportunities in your field, you might be entitled to up to 12 months reasonable notice or pay in lieu.  Many termination packages start with a low offer, and you might be entitled to significantly more.

Consider Litigation.

Employees may negotiate with employers to resolve disputes, but legal action may be necessary in those cases where the employer is not prepared to negotiate.  Many people fear litigation; however, there is no need to.  As noted above, litigation is relatively rare, and most claims are settled early in the process. If needed, litigators will drive this forward.

Job Search – Mitigate Your Loss.

After being terminated, you have the legal obligation to use reasonable efforts to replace the job you lost with a comparable one, to mitigate the loss of your job.  Your lawyer should be advising you to keep a record of your efforts, in case it is later needed during litigation to prove you have not breached your duty.

Other mitigation steps could include: updating your resume and LinkedIn profile;  attending networking events, or reaching out to professional contacts can help;  exploring opportunities for re-education or skills enhancement if that would help you to find comparable employment in a difficult market.

Apply for Government Benefits.

Employees who are terminated may be eligible for Employment Insurance (“EI”) benefits. Visit the Government of Canada’s website to learn more about eligibility criteria and how to apply for EI benefits. While receiving EI can avoid gaps in your income, please also keep in mind that you may need to remit what you get after receiving your severance package or judgment.

 

What Not to Do:

Don’t Disparage.

Avoid venting your frustrations on social media or speaking negatively about your former employer. During this challenging time, it is essential to maintain professionalism.

Disparaging and defamatory comments could expose you to liability, and also cause difficulties in negotiations. If you do bring a claim against your former employer, it could also lead to a counterclaim for damages against you. Tempting as it may be to vent your frustrations, it is best to maintain a positive and constructive attitude, regardless of any negative experiences.

Don’t Rush into Accepting a Job Offer out of Desperation.

It is important to take the time to carefully consider any job offer you receive, especially if you are feeling desperate for employment. You are only legally required to accept comparable jobs, not any job.  You should also bear in mind that any income you earn might be set off against termination pay that you might be claiming from your former employer.

Conclusion

Losing your job can be overwhelming, but following these steps can help you navigate the process more effectively. Remember that you have rights as an employee in Ontario, and seeking legal advice can be a crucial step in ensuring you are treated fairly during your termination.