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.

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.

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.

The recent viral Coldplay “kiss‑cam” moment caused quite a sensation on social media and uncovered costly risks for employers to consider. At Coldplay’s July 16, 2025 show, the venue’s “kiss‑cam” panned to two concert goers –tech company Astronomer CEO Andy Byron and Chief People Officer Kristin Cabot – who were embracing when they visibly ducked and turned away. The two executives were seemingly caught very publicly having an affair. The video racked up tens of millions of views on social media and has since led to both Byron and Cabot resigning.

Sifting through all of the satire and unfortunate public statements, it reminded many of last year’s abrupt termination of RBC’s CFO following an internal probe into her undisclosed personal relationship.

Office romances aren’t uncommon, and workplace policies are generally put in place to mitigate any risk that might arise from power dynamics and favouritism, protecting the well-being of a company’s public reputation. These two incidents are stark reminders for employers of how quickly a workplace romance can become a public and legal headache. Employers must have the proper policies and protections in place.

Employers must update harassment and workplace relationship policies to ensure they are legal, enforceable, and reflective of today’s social environment. If you are not working with a legal professional to regularly review these policies, you are opening yourself up to costly lawsuits and public breakdown of trust. Here are several factors to consider as an employer after an office romance emerges.

Verify Consent and Power Dynamics

Before any disciplinary step, discreetly confirm that the relationship is fully consensual. If one party supervises or can influence the other’s job, or if there are any signs of pressure or coercion, you may need to treat the matter as a potential harassment complaint under the Occupational Health and Safety Act or a human‑rights issue under the Human Rights Code.

Leverage and Enforce Policies

If it was a consensual relationship and the undisclosed affair breaches relevant interpersonal policies such as a non-fraternization policy, employers could take actions outlined in those policies, which might include termination.

A written policy about certain types of personal relationships can provide guidance on how to deal with workplace romance, including the reporting process, confidentiality, whistleblower protection, investigation process, consequences of violation, etc. For instance, if a policy specifies that a failure to disclose a romantic relationship with a subordinate will lead to termination, it can more easily justify a termination for cause. Absent such policies, when assessing whether an office romance justifies termination, they need to examine whether it fundamentally undermines the employment relationship by violating an essential contractual obligation or breaching the faith inherent in the trust relationship.

For example, an Ontario court upheld a just‑cause dismissal in Reichard v. Kuntz, 2011 ONSC 7460, where a purchasing manager was terminated after his affair with his subordinate emerged. He violated the non-fraternization policy by lying about the relationship, taking extended lunches, recommending her transfer, and defying orders during the investigation. These actions undermined the trust, integrity, and honesty expected from a manager. As a result, the termination for cause was justified.

Conduct a Workplace Investigation

Many office‑romance policies impose a duty to investigate and provide detailed guidelines. If no relevant policy is in place, employers should still investigate before implementing any disciplinary actions against the employees involved.

The investigation should be conducted in good faith and adhere to proper procedural requirements. In Rutledge v. Markhaven Inc., 2022 ONSC 3183, the employer was penalized for its conduct during the investigation into workplace romance involving its executive director. The court criticized the employer’s investigative process as severely flawed, breaching the duty of good faith and fair dealing. As a result, the employer was ordered to pay $244,852.41, which included $50,000 in moral damages.

Workplace Law Takeaways From the Coldplay Scandal

1. Establish and Regularly Review Policies

The Coldplay scandal shows employers that it is imperative to engage legal counsel to adopt a clear workplace relationship policy before there is an issue. Policies should include a requirement of timely disclosure, particularly in any reporting‑line scenario, and outlines investigation procedures and consequences for noncompliance. Cases show that where an employer has a well-defined workplace policy on intimate relationships, disclosure obligations and conflicts of interest, it is far easier to justify an employer’s disciplinary actions.

Employers should also work with experienced employment lawyers to review existing policies regularly to ensure all approaches will withstand scrutiny.

2. Conduct Proper Workplace Investigations

Employers are encouraged to hire an experienced lawyer to investigate any incidents related to workplace relationships before proceeding with termination. Discipline or termination is rarely justifiable on private moral grounds alone. An experienced investigator will gather any evidence of conflicts of interest, dishonesty, insubordination, or other behaviours, and provide legal advice on the next steps if disciplinary actions are warranted.

3. Extra Considerations for Hiring Executives

When hiring executives, companies should consult a lawyer about the extra requirements for these roles to ensure accountability and enable swift action if the executives cross the line. The Coldplay kiss-cam incident highlights that executives’ behaviour can significantly impact a company’s reputation. For instance, employers may consider including a morality clause in executive employment agreements or codes of conduct. This clause would hold executives to a higher standard of integrity and professionalism, as conduct such as public scandals or convicted criminal offences may result in termination due to the reasonably foreseeable damage to the company’s reputation.

In February 2025, the United States government started a trade war, announcing sweeping tariffs across various countries. While the initial tariffs were paused short term, several tariffs remain in place and tensions have escalated globally as countries, including Canada, have issued retaliatory measures. The magnitude of the tariffs and their uncertainty have already severely undermined the market with recession predictions looming, and caused chilling effects on the Canadian job market as businesses desperately try to adjust.

Many businesses are attempting to reduce expenses, including payroll, to stay afloat.

These are good-faith reasons to mitigate business losses when facing unexpected political and economic turmoil. However, if not handled properly, the businesses’ efforts to reduce their payroll may lead to wrongful termination claims and extra unexpected costs such as termination pay and legal expenses.

Many payroll reduction methods are prone to such risks, such as reducing employees’ compensation, temporarily laying them off, and terminating them without cause.

Reducing an employee’s compensation

An employer may try to reduce an employee’s compensation by (i) reducing their hours of work if they are paid an hourly rate, (ii) reducing agreed compensation, such as salary, and (iii) reducing discretionary compensation, such as bonus and incentive pay.

Suppose the employer reduces hours of work because it does not guarantee hours of work, or reduces or eliminates truly discretionary bonus or incentive pay; that may not trigger claims for constructive dismissal or unpaid wages in that case.

However, under many circumstances, it is implied that there is an expectation of minimum hours of work or bonus or incentive pay. For example, if an employer regularly asks an employee to come to work for a certain number of hours per day over a long period of time, the court may think that there is an oral agreement of how many hours the employee should work each day. Similarly, if an employer consistently pays out year-end bonuses or the incentive pay is purely based on objective criteria, the court may find that the bonus or incentive pay is not discretionary at all but an integral part of their employee’s compensation. In these situations, payroll reduction methods may be a breach of the employment contract, leading to claims for unpaid wages or even constructive dismissal, leading to a substantial amount of termination pay.

Temporary Layoff

Under most circumstances, employers do not have the right to layoff employees, unless explicitly stated in the employment contract.

Without a contractual right to layoff, a temporary layoff will lead to claims for constructive dismissal and termination pay. This means that even though the employer intends for a temporary layoff, the employee and the court may treat it as a permanent termination and ask the employer to make termination pay accordingly.

Furthermore, even if an employer has the right to lay off, there is a time limit under the applicable legislation on how long it can last, or it is deemed termination, and the employer will be liable for their employee’s termination entitlements. For example, under the Ontario’s Employment Standards Act, 2000 (“ESA”), in the non-unionized context, a temporary layoff can last no longer than 13 weeks within any 20 consecutive weeks or no longer than 35 weeks within any 52 consecutive weeks, if other conditions are met.

Termination without cause

In Canada, under most circumstances, employers are able to terminate their non-unionized employees without cause or eliminate positions due to economic hardship, but it will likely entitle employees to termination notice or pay in lieu of such notice.

Many employers believe they can rely on the termination terms of their employment contracts or the applicable employment standards legislation to determine how much termination pay they should pay. Unfortunately, that is usually not the case.  Employment standards legislation sets the minimum entitlements for employees.  However, employees often have greater rights under common law, especially regarding entitlements on termination of employment. The court will presume that employees are entitled to common law reasonable notice upon termination. This does not apply if there is a written contract with termination clauses that (i) clearly contract out that presumed entitlement, and (ii) the written clause is in compliance with the employment standards legislation. In many cases, termination clauses are not written properly so they will be unenforceable.

Especially in recent years, courts have been stringent in scrutinizing termination clauses, and have readily set any aside that do not meet the minimum standards.For example, if the termination clause simply says the employer can terminate the employee without cause at any time, which goes against the ESA, an Ontario tribunal may nullify the termination clause in accordance with the decision of Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029. Without an enforceable termination clause, the employee will likely be entitled to more generous common law termination entitlements, which will probably lead to a wrongful dismissal claim.

Special risk due to trade wars

Another risk the employer should be aware of is the impact of the trade wars may make it longer for employees to secure reemployment.  The trade wars will likely negatively impact many industries or sectors of the job market, reducing the pool of available employment opportunities. Provided evidence is provided about the negative impact, the court may factor in the lack of available work to increase the otherwise applicable reasonable notice entitlement.   In Kraft v. Firepower Financial Corp., 2021 ONSC 4962, a Covid-era case, the court stated at paragraph 22 that “there is evidence that the pandemic impacted on the Plaintiff’s ability to secure new employment. In light of that evidence, he deserves to receive at least somewhat above the average notice period.”  Similar principles will likely be factored in for terminations occurring during the current economic situation, and lead to increases to the employer’s otherwise applicable liability for termination and severance pay.

As such, although reducing payroll to protect the business is a legitimate path, it is filled with landmines, especially during economic uncertainty. If not properly handled, employers may face unexpected legal disputes and termination pay, increased expenses, and even termination of employees whom the employer may want to recall. As such, employers should proceed cautiously and seek professional advice when necessary.

On March 4, 2025, the United States imposed a 25% tariff on a broad spectrum of Canadian goods, including steel, aluminum, automotive parts, and agricultural products that kicked off an ongoing tradewar. While many of the tariffs have been walked back, there is continued trade tensions between the two nations, prompting Canada to implement reciprocal measures. Ontario, for example, has responded by banning American companies from provincial contracts and terminating a $100 million agreement with Elon Musk’s Starlink.

For many Canadian businesses, Trump’s tariffs are an existential threat. To manage this threat and remain competitive, temporary layoffs may be necessary to offset increased operational costs and fluctuating demand. However, unless employee contracts are written properly and are enforceable, the cost of layoffs could be as destructive to the business as the tariffs themselves. Without enforceable layoff clauses any employee laid off will immediately be able to sue their employer for constructive dismissal. The damages could be as much as two years salary and benefits, similar to many cases during the pandemic. In many cases, businesses have not made the necessary adjustments to employee contracts, leaving them vulnerable to the risks associated with the tariffs and the current trade war. This threat is particularly concerning for business that rely on cross-border trade.

Layoffs vs. Terminations

As demand wanes and revenues decline, Ontario employers may be compelled to evaluate strategies to manage employment costs effectively. There are two primary avenues to reduce the workforce: terminations and layoffs. Obviously, termination is a permanent end to the employment relationship. On the other hand, a layoff is usually a temporary reduction of hours or suspension of employment, with the expectation that the employee may be recalled at a certain point. Compared to terminations, layoffs are more nuanced and require extra legal precaution.

Do you really have a right to temporarily lay off your workers?

A prevalent misconception among Ontario employers is the assumed right to impose temporary layoffs solely based on the lay-off provisions of the Employment Standards Act, 2000 (“ESA”). The ESA outlines the maximum length of temporary layoffs:

• Up to 13 weeks in any period of 20 consecutive weeks; or
• More than 13 weeks but less than 35 weeks in any period of 52 consecutive weeks, provided certain criteria are met, such as continuing benefits to the employee.

However, these statutory provisions do not inherently grant employers the unilateral right to lay off employees. If there is no valid clause in the employment contract permitting temporary layoffs, such actions will lead to constructive dismissal under common law, entitling employees to reasonable notice.

Temporary layoff clarification during the COVID-19 pandemic

During the COVID-19 pandemic, many employers experienced financial difficulties that led them to implement temporary layoffs without valid provisions, resulting in constructive dismissal claims and significant termination damages.

In Fogelman v. IFG, 2021 ONSC 4042, an employee with 11 years of tenure was “temporarily laid off” due to a business downturn. He successfully claimed constructive dismissal, which resulted in the employer being ordered to provide 15 months’ notice and additional damages totalling $178,218.13.

Subsequently, recognizing the unprecedented nature of the pandemic, Ontario enacted the Infectious Disease Emergency Leave, O. Reg. 228/20, on July 22, 2022. This regulation stipulated that temporary reductions or eliminations of an employee’s hours or temporary reductions of wages for COVID-19-related reasons would not constitute constructive dismissal. In other words, employers were protected from the risk of constructive dismissal claims arising from COVID-19-related temporary layoffs.

Will Ontario employers enjoy similar legislative protection when faced with this “War of Tariff”? Likely not.

Proactive measures for employers

To reduce potential legal risks associated with layoffs resulting from tariffs, Ontario employers should take proactive steps:

1. First, employers should review all employment contracts to ensure they contain clear and enforceable clauses that allow for temporary layoffs.
2. If there is any uncertainty, it is advisable for employers to consult with legal counsel before proceeding with layoffs.
3. With the assistance of legal counsel, employers should create a comprehensive plan for workforce reduction.

As Ontario deals with the impact of new tariffs and the economic challenges that follow, employers need to approach employee layoffs carefully. It is important to get a clear understanding of the laws around temporary layoffs to avoid issues like costly constructive dismissal claims. By taking the time to review employment contracts and consult with legal experts, employers can create strategies that protect their business and reduce legal risks. As the economic and political situation keeps changing, these proactive steps will be key to maintaining business stability despite ongoing trade difficulties.

Reaching a settlement after a contentious dispute between an employer and employee, perhaps over the termination of their employment and allegations of discrimination, likely means settlement terms that includes confidentiality and non-disparagement clauses. These confidentiality and non-disparagement clauses live on, long after payment is made and the parties have seemingly moved on, and can carry very costly consequences. The following cases highlight just how costly it can be for employees who fail to abide by these terms.

The Importance of Confidentiality and Non-Disparagement Clauses

Settlement agreements in employment disputes frequently contain clauses requiring both confidentiality and non-disparagement. The confidentiality clause generally prohibits parties from disclosing the terms or existence of the settlement. Non-disparagement clauses go further, preventing the employee from disparaging their former employer, regardless of whether or not those comments are true. Depending on how the settlement agreement is worded, breaching these clauses can result in the employee being required to return the entire settlement payment, a heavy price for any indiscretion.

The Jan Wong Case: A Landmark Decision on Confidentiality Breach

What happened with Jan Wong, a former journalist with The Globe and Mail, after she settled a wrongful dismissal claim with her employer is a warning that there are serious consequences to breaching confidentiality and non-disparagement clauses.

Many of us will remember that Jan Wong was terminated from her job at the Globe after she took sick leave due to deteriorating mental health due to personal attacks related to her work. Her union grieved the termination and the employer’s refusal to pay sick leave, and ultimately, a settlement was reached, which included a confidentiality clause requiring Wong to not disclose the settlement terms and a non-disparagement clause preventing her from disparaging The Globe and Mail. If the terms were violated, Wong would have to return the settlement funds. The settlement resulted in Wong receiving a severance package, amounting to two years’ pay.

Four years after the 2008 settlement, Wong published a book entitled “Out of the Blue” that discussed both her mental health and her dispute with The Globe and Mail. In four separate instances in the book, she commented directly on the settlement, saying things such as, “I can’t disclose the amount of money I received,” “I’d just been paid a pile of money to go away …” “Two weeks later a big fat check landed in my account,” and “Even with a vastly swollen bank account.” The Globe pounced on this and sued for breaching the confidentiality aspects of the settlement. Wong defended on the basis that she had not disclosed the specific terms, such as the exact severance amount, and therefore had not violated the confidentiality agreement. In Jan Wong v. The Globe and Mail Inc., 2014, Justice Nordheimer, upheld the arbitrator’s decision that Wong’s disclosures were indefensible breaches of her settlement agreement. As a result, Wong was ordered to return her entire severance package of two years’ salary—a staggering penalty for a few careless words.

The L.C.C. Case: Expanding the Breach to Non-Disparagement

In L.C.C. v. M.M., 2023 HRTO 1138,  the Human Rights Tribunal of Ontario (HRTO) further expanded the understanding of how breaches of these clauses can unfold. This case involved an employee who filed a human rights complaint alleging sex discrimination against their employer. The matter was settled, with the settlement agreement containing both confidentiality and non-disparagement clauses. It also included a provision that, in the event of a breach, the employee would be required to return the settlement funds.

Despite agreeing to these terms, the employee posted on their LinkedIn profile, stating: “To all those inquiring, I have come to a resolution in my Human Rights Complaint against [the applicant corporation] and [the individual applicant] for sex discrimination.” The employer claimed that this post violated both the confidentiality and non-disparagement clauses of the settlement, and the HRTO agreed.

The employee argued that they did not breach the confidentiality clause, as they had only disclosed that the matter had been resolved, which they believed was permissible under the settlement terms. The tribunal, however, disagreed. It found that the post went beyond the permitted statement that “all matters have been resolved,” especially because the employee had mentioned the allegations of sex discrimination—a sensitive issue that had a broader public impact. Moreover, the tribunal noted that this was not a private conversation in response to an inquiry but a public post on a professional platform, which significantly widened the scope of disclosure under the confidentiality clause.

In addition to breaching the confidentiality clause, the tribunal found that the employee violated the non-disparagement clause. The employee contended that their statement was truthful and therefore could not be considered disparaging. The tribunal, however, clarified the distinction between defamation and disparagement in paragraph 44 of its decision, and non-disparagement clause prohibits more than untrue statements. It also prohibits disparaging communications. Non-disparagement prevents damaging communications whether or not they are true. While truthfulness is a defence to a claim of defamation, not so to a non-disparagement violation.

Thus, the fact that the employee’s statement was truthful did not shield them from liability under the non-disparagement clause. The employee was ordered to repay the full settlement amount—a harsh outcome resulting from a single public post.

Even without a typical Jan Wong clause, these obligations still sting

In Tremblay v. 1168531 Ontario Inc., 2012 HRTO 1939, the employee and employer, after mediation, reached a settlement that contained a standard confidentiality clause. However, during and after the mediation, the employee posted the following messages on her Facebook account:

• The first message was posted during the mediation:
  • Sitting in court now and _________ [blank in original posting] is feeding them a bunch of bull shit. I don’t care but I’m not leaving here without my money…lol.
• The next two messages were posted after the Minutes of Settlement were signed:
  • Well court is done didn’t get what I wanted but I still walked away with some…
  • Well my mother always said something is better than nothing…thank you so much saphir for coming today….

Although, unlike in Jan Wong, the confidentiality clause did not require the employee to return the settlement funds upon violating the clause, the HRTO nonetheless found the employee breached the confidentiality clause and reduced the settlement amount by $1,000 as a result, which was still a high price for posting 3 Facebook messages.

Lessons to Be Learned

These cases underscore the weight and importance of confidentiality and non-disparagement clauses in employment settlements.

Employees should be extremely cautious when signing settlement agreements that include confidentiality and non-disparagement clauses. Unlike defamation law, where truth is a defence, non-disparagement clauses can be breached even if the statements made are true. The broad scope of these clauses means that even seemingly innocent comments can lead to financial penalties. Employees should carefully review the terms of any settlement agreement, ensure they understand their obligations, and consult legal counsel if they are unsure about what they can say post-settlement.

Employees may feel like trumpeting to the world that they won a big settlement from the employer. Knowing this, confidentiality and non-disparagement clauses are inserted precisely so that employers are not faced with any reputational damage, especially where employers simply settled to avoid litigation and admit no liability. However, as these cases highlight, the dangers of not being able to keep one’s mouth shut could mean relinquishing that big win. These clauses are a powerful tool to protect an employer, and may also be the reason for a larger payout to the employee. Counsel acting for employers and employees need to be aware of the might of these clauses, and to properly advise clients of their scope and enforceability. An employee who tries to dance around the terms, even years after the fact, will know soon enough their might when they are forced to return settlement funds and possibly face other damage claims!

Whistleblowers can be important in maintaining corporate integrity, especially when senior leaders engage in behaviour that violates ethical codes. Recently, the CFO of Royal Bank of Canada (RBC) was publicly dismissed after a whistleblower alleged the CFO had an undisclosed personal relationship with a colleague, leading to preferential treatment regarding promotions and compensation. Both employees were terminated, and the affair brought to light a misuse of corporate resources.

The Role of the Whistleblower

The situation at RBC could have remained hidden if it were not for the whistleblower who exposed it. The role of the whistleblower is crucial in circumstances where unethical conduct compromises professional judgment and could lead to significant damages to the employer.  The whistleblower’s actions can prevent such corporate damages.

However, two critical questions arise: First, does an employee owe the employer a duty to whistleblow? Second, if so, how can a healthy system be established to encourage whistleblowing?

The Whistleblower’s Responsibility

At the heart of the RBC case lies a question: What is the obligation of someone who becomes aware of their colleagues’ affair?

Legal Framework

Currently, Canada does not have legislation mandating employees to blow the whistle when they learn of another employee’s unethical conduct.

However, under common law, as affirmed in Prim8 Group Inc. v Tisi, 2016 ONSC 5662 and Mann Engineering Ltd. v Desai, 2021 ONSC 7580, employees owe their employers a general duty of good faith and loyalty (or fidelity) as an implied term of their employment contract. This duty includes working in the best interests of the employer, refraining from engaging in conduct harmful to the employer, and, in certain cases, reporting unethical or illegal activities within the organization. This fundamental principle influences when and why an employee may feel the need to report wrongdoing, emphasizing the expectation that employees contribute to a healthy and ethical organizational culture.

The Duty of Whistleblowing Depends on Context

Whether an employee is required to blow the whistle depends on the specific context.

For instance, an executive may be held to a higher standard compared to a clerk when it comes to reporting misconduct that is harmful to the company.

It also depends on the nature of the misconduct. In the RBC termination case, RBC’s policy clearly stated that any close personal relationship between colleagues must be disclosed, particularly when one individual has the power to influence the other’s promotion, compensation, or work conditions. The undisclosed personal relationship was not just unethical; it was potentially destructive to RBC’s decision-making process, as it created the appearance that promotions and financial rewards could be obtained through personal relationships rather than performance. Ignoring misconduct that undermines fair treatment, equal opportunity, and ethical standards can allow problems to persist, potentially harming RBC’s reputation and culture. In such a situation, it calls for a higher standard when determining the duty of whistleblowing, as the decision not to report unethical conduct can be just as damaging as the misconduct itself.

A Healthy System for Whistleblowing

Whistleblowers often step forward out of a sense of loyalty, particularly when the misconduct does not directly affect them. It often requires great courage to come forward, especially when wrongdoers hold positions of power, such as the CFO in the RBC case. Employers should establish a system that supports and protects whistleblowers.

Statutory Protections in the Public Sector

Although it is not mandatory for public servants to report wrongdoing, Canada’s public sector benefits from comprehensive legislative frameworks that encourage employees to do so. The Public Servants Disclosure Protection Act offers federal public employees the ability to report unethical behaviour with assurances against reprisal. It places a duty on federal public employers to conduct thorough investigations into any allegations and protect whistleblowers from retaliation. Similarly, Ontario provides analogous protections for employees working in the public domain.

Best Practices in the Private Sector

While private sector employers are not uniformly bound by the same statutory frameworks as the public sector, they should consider developing policies that not only align with legal expectations but also foster a culture of transparency and accountability. Implementing an effective whistleblowing system goes beyond regulatory compliance and demonstrates an organization’s commitment to ethical operations.

Prohibition against Reprisal

Like the legislation in the public sector, private employers should establish whistleblowing policies to protect employees who report wrongdoing.

Case law has confirmed that whistleblowers are protected from retaliation. In Bank of Nova Scotia v. Randhawa, 2018 FC 487, the Federal Court held that the termination was “tainted” because the escalation of disciplinary action was, in fact, reprisal for the employee’s whistleblower complaints. As a result, the bank was ordered to reinstate the employee and compensate her for over 3.5 years of lost wages.

Employers should clearly define what actions can be considered as retaliation, such as workplace harassment, unjust disciplinary measures, and termination.

Confidentiality is a crucial aspect of whistleblowing policies as it helps to safeguard whistleblowers from retaliation and alleviate their fears of reprisal. It is important to note that in some cases, investigations may necessitate revealing the whistleblower’s identity to the investigator. However, the investigator will not disclose this information to any third parties unless with the whistleblower’s consent or as required by law. Anonymity can also be an option in other cases, but employers must balance this with the potential limitations of the investigation.

Clear and Accessible Reporting Mechanisms

A strong whistleblower policy should be easily understood by all employees. It should outline the steps for reporting misconduct. Clear guidelines ensure that employees are aware of what can be reported, how to report it, and how the company will handle it.

Organizations should also create accessible reporting forums. These can be dedicated hotlines, secure online portals, or internal reporting systems. As mentioned above, policies should also reassure employees that the reporting will be confidential, regardless of the forum used.

Transparency and Impartial Investigations

Employees often avoid reporting misconduct due to concerns that their complaints will be ignored. Employers must foster a culture of transparency by showing a genuine commitment to addressing reports of wrongdoing.

For some cases, especially those involving high-level executives, appointing independent external investigators can ensure neutrality, maintain the integrity of the process, and assure employees that their concerns are handled fairly. In RBC’s case, the whistleblower triggered an investigation that involved external legal counsel, to avoid conflicts of interest and ensure objectivity. Independent assessments enhance credibility and demonstrate a commitment to fairness.

Also, involving legal counsel early in the process can help preserve the integrity of the investigation and ensure that any communications and reports generated are protected by legal privilege where applicable.

In addition to the investigation process, an effective whistleblowing system should also include provisions for taking action after an investigation. The policy should outline how investigations are conducted and ensure that those involved in misconduct are held accountable. Employees need to have confidence that their concerns will lead to appropriate corrective measures, whether that means disciplinary action or changes to prevent future issues. Transparency about the outcomes of investigations, when appropriate, can further bolster trust in the system.

The RBC case underscores the pivotal role that whistleblowers play in upholding corporate integrity and governance. It brings to light the complexities surrounding the duty of whistleblowing and the need for a supportive framework that encourages individuals to come forward with information about unethical conduct. Both public and private sectors can benefit from establishing a policy and system that not only protects but also values the courage of whistleblowers. By doing so, organizations can ensure that they operate not just within the bounds of legality but also within the realms of ethical responsibility, thereby safeguarding their reputation, culture, and ultimately, their success.