As we leave behind 2022, the long shadow of COVID-19 continues to linger and may have changed our workplaces forever.

Perhaps the most significant workplace trend with long term effects on employers is remote work.  Given how it proved to be a viable option for many workplaces over the pandemic, as workplaces started opening in late 2022, employees are demanding the ability to work from home at least some of the time.  As employers navigate this option, legal risk factors include how to record and determine working hours and overtime, how remote work will affect employees’ right to disconnect, and how privacy issues intersect with an employer’s electronic monitoring.

Against that backdrop, below are important employment law developments we saw in 2022 for Ontario employers, and what that could mean in 2023.

Employment Development #1: IDEL and Constructive Dismissal Claims

As of July 30, 2022, employers can no longer rely on the Infectious Disease Emergency Leave regulation (“IDEL”) to put employees on indefinite leave.  After that date, employers could rely on the ESA temporary layoff provisions to further delay their employees’ return to work.

However, it remains unclear whether employers who had put employees on IDEL are at risk of a successful constructive dismissal claim.  Given conflicting lower court decisions in Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076, Fogelman v. IFG, 2021 ONSC 4042, and Taylor v. Hanley Hospitality Inc. (Taylor), 2021 ONSC 3135, the latter’s appeal to the Ontario Court of Appeal was expected to give us clear guidance in 2022.  Instead, the Court of Appeal in Taylor v. Hanley Hospitality Inc., 2022 ONCA 376 ultimately decided the appeal without deciding this issue.

We can look forward to more definitive direction from a Superior Court or an appellate court decision in 2023.

Employment Development #2: Termination or layoff due to non-compliance with vaccination policies

Throughout 2022, mandatory vaccination policies in the workplace were a notable topic of discussion.  As the vaccination rate among Canadians is high and COVID-19-related restrictions have lifted, it may become increasingly difficult in many workplaces to justify a mandatory full vaccination policy in 2023.

Past cases, generally decided in labour relations cases by arbitrators, tended to uphold an employer’s right to have a mandatory full vaccination policy.  These cases were decided during the peak of the pandemic when the vaccination rate was not high enough, and old variants were more deadly than new ones.

Those trends started to change by mid-2022.  For instance, in July 2022, the arbitrator in FCA Canada Inc. v Unifor, Locals 195, 444, 1285, 2022 CanLII 52913 (ON LA), held that a two-dose requirement was reasonable when it was initially introduced, but was no longer reasonable as of the date when the decision issued. In Toronto Professional Fire Fighters’ Association, I.A.A.F. Local 3888 v Toronto (City), 2022 CanLII 78809 (ON LA), the arbitrator upheld the mandatory vaccination policy requiring two doses as reasonable, but found that the enforcement mechanisms of disciplinary suspensions and discharge for non-compliance were unreasonable.

While different considerations will be at play in the non-unionized context, we can expect more labour relations decisions in 2023 that will temper the reasonableness of a mandatory full vaccination policy.  Employers will continue to face uncertainty and risk if they decide to terminate employees due to non-compliance with mandatory vaccination policies, as the cases will likely be decided on a case-by-case basis.

Employment Development #3: Electronic monitoring policies put transparency first

Privacy rights are a growing concern especially as employers incorporate permanent remote work and hybrid work models. Government is responding to employee concerns with legislation forcing transparency on employers. For instance, an amendment to the Employment Standards Act, 2000 (“ESA”) on April 11, 2022 requires employers with 25 or more employees on January 1 of any year  to have a written policy in place by March 1 of that year on the electronic monitoring of employees.

The policy must include:

• A description of how and in what circumstances the employer may electronically monitor employees.
• The purposes for which the information obtained through electronic monitoring may be used by the employer.
• The date the policy was prepared.
• The date any changes are made to the policy.

Failure to do so may result in complaints to, and investigations by, the labour division of Ontario’s Ministry of Labour, Immigration, Training and Skills Development. As noted in our article Ontario Electronic Monitoring Policy Due by October 11, 2022 this should be reviewed annually.

Employment Development #4: Digital Platform Workers’ Rights Act

The Digital Platform Workers’ Rights Act was passed in April 2022, and we expect that the contemplated amendments to the ESA will be declared in force sometime in 2023.

This Act will apply to digital platforms and their workers, such as DoorDash and Uber and their drivers – the vast majority of whom are currently unprotected as independent contractors.  The changes contemplated will provide all digital platform workers with comprehensive minimum rights to:

• Information (section 7).
• A recurring pay period and pay day (section 8).
• Minimum wage (section 9).
• Amounts earned by the worker and to tips and other gratuities (section 10).
• Notice of removal from an operator’s digital platform (section 11).
• Resolve digital platform work-related disputes in Ontario (section 12).
• Be free from reprisal (section 13).

Digital platforms will need to invest significant time and resources to bring themselves into compliance. They should consider starting as early as possible to avoid risk of financial liability, even before the Act comes into force.

Employment Development #5: Reckless Termination and Discrimination Claim

Employees who have been recklessly terminated may claim significant damages against their employer. In Luckman v. Bell Canada, 2022 CHRT 18, a recent decision of the Canadian Human Rights Tribunal (“CHRT”), the employer, Bell Canada (“Bell“), terminated their employee, Mr. Luckman, citing corporate restructuring.  Bell denied that performance was a reason for his termination.

However, prior to his termination, Mr. Luckman had taken a few medical leaves of absence as he suffered from health issues known to Bell.  On his return from a second medical leave, Bell failed to offer any accommodations, such as a flexible schedule, remote work, or additional resources, to deal with known stresses of his return to work, ultimately affecting his performance.

Bell might have legitimately cited performance issues but provided no evidence that it had tried to manage performance or that the selection process to terminate him as opposed to another employee was based on non-discriminatory grounds.  Rather, the Tribunal found that Bell’s termination was reckless as, even though Mr. Luckman’s medical limitations were known to Bell, Bell offered no accommodation on his return to work, and no one seemed to have “considered whether firing an employee recovering from cancer surgery might be discriminatory.”  For this “reckless termination”, the Tribunal awarded $15,000 in damages for pain and suffering, a further $15,000 for Bell’s wilful and reckless conduct, as well as $91,052.40 for lost wages.

Employers should proceed cautiously when they know, or should know, that there are potential human rights issues in terminating an employee or be at risk of potentially significant financial liability.

Employment Development #6: Removal of Canadian Experience Requirement

Requiring Canadian experience as part of licensing criteria in any of the regulated professions will be deemed void on and after December 1, 2023. This opens up employment and business opportunities to internationally trained professionals. This important development, the result of over a decade of advocacy, arose from Bill 27: Working for Workers Act, 2021, which received royal assent on December 2, 2021.  Strictly speaking, this is not a 2022 development; however, since the Bill grants a 2-year grace period for compliance, over the course of 2022 and into 2023, Ontario regulators of professions will bear the onus of removing the Canadian experience requirements from their licensing criteria, except for public health and safety exemptions.

A list of regulated professions can be found in Schedule 1 of the Fair Access to Regulated Professions and Compulsory Trades Act, 2006, SO 2006, c 31.

Employment Development #7: CERB Not Deductible From Wrongful Dismissal Damages

In Yates v. Langley Motor Sport Centre Ltd., 2022 BCCA 398, the British Columbia Court of Appeal overturned a lower court’s decision and ruled that the Canada Emergency Response Benefit program (“CERB”) benefits received during the termination notice period is not deductible from the wrongful dismissal damages. The Court of Appeal noted that broader policy considerations and the purpose of the CERB program, designed to support employees but not to give employers a windfall, support a conclusion that CERB payments should not be deducted from damages awarded.  Whether employees should pay back CERB is an issue between the government and these employees, and not between employees and their employers.

Although not binding other than in British Columbia, this appellate decision is helpful as lower courts across Canada have been divided on this issue.  We may see more appellate decisions that will settle this issue definitively.

Finally, as employment law keeps evolving, and as we emerge from the Covid-19 shadow into transformed workplaces, employers are well-advised to consult regularly with experienced counsel to ensure continuous compliance.

If you were placed on temporary layoff by your employer when the COVID-19 pandemic closures started in March 2020 and you are still not back to work, you have been constructively dismissed. You need to protect your rights immediately before you walk away with nothing.

As of July 30^th, 2022, your employer cannot use the pandemic as an excuse to keep you on long-term leave as part of the Infectious Disease Emergency Leave (“IDEL”). Some employer protections that were put in place during the pandemic are no longer valid. This opens the door to the statutory constructive dismissal under the Ontario Employment Standards Act, 2000 (“ESA”), in addition to common law constructive dismissal claims..

If you are still on temporary layoff your window for common law constructive dismissal claims and wrongful dismissal damages may be closing, which means you will have no option for legal recourse.

When a layoff occurs, there is a two-year limitation period during which an employee can pursue a constructive dismissal claim and wrongful dismissal damages. Although Ontario suspended the running of limitation and time periods in March 2020, effectively extending the limitation period for employment matters between March 16, 2020, and September 14, 2020, by six months, now is the time to act. More urgently, the court may also consider your inaction as acquiescence, which leaves you with a much shorter window to act, especially when you have not protested against the layoff.

Did your employer have the right to lay you off?

Most employees believe incorrectly that their employer can place them on temporary leave. Generally, employers are not permitted to do so absent a specific term in the employment agreement permitting them to lay off employees. If your employer laid you off, in the vast majority of cases, this would change a fundamental term of your employment. As such, you have been terminated and you are due severance and termination pay.

The question of whether the IDEL protects employers from constructive dismissal claims is making its way through the courts. The decisions in Coutinho v Ocular Health Centre Ltd.,  and Fogelman v IFG state that the IDEL did not restrict an employee’s common law right to treat a temporary layoff as a constructive dismissal and that the IDEL only covered terminations under the ESA. However, in June 2021, Taylor v Hanley Hospitality Inc., (“Taylor”) the court came to the opposite conclusion, concluding that IDEL displaced the common law and, therefore, limited a plaintiff’s common law right to treat a temporary layoff as a constructive dismissal. We understand that Ontario’s Court of Appeal has set aside the Taylor case’s order on other grounds and remitted it back for reconsideration, so there may be better guidance following the decision on this issue. In our experience, many employers are willing to negotiate a severance package, rather than rely on Taylor.

Your actions matter more than you think

As briefly mentioned above, you should also be aware that the longer you wait to dispute a temporary lay off, the larger the risk that you will be considered to have accepted it by acquiescence. For example, for employees who have been laid off since May 2020, their employer has a strong argument that they have accepted the change to the employment relationship and have not been constructively dismissed.

In addition, asserting constructive dismissal as of the date of temporary layoff can cause other issues. The employer may seek to have any wrongful dismissal damages reduced by the amount of benefits, such as CERB, that you may have received during the layoff period. Courts in Ontario have stated that CERB should not be deducted from wrongful dismissal damages, but courts in other jurisdictions have said otherwise.

What you need to do next

We recommend pursuing severance now to avoid the risk that you would be viewed to have accepted the layoff. We advise you consult an employment lawyer immediately.

You must act now if you wish to pursue wrongful dismissal damages. If you wait to act you will likely not get the outcome you want if the limitation period for your claim has expired, or your employer can establish you have accepted the lay off.

Has your role changed? Is your employer lowering your compensation?  You may be questioning the employer’s right to do this, and you may be considering a constructive dismissal claim while still working. Well, do not wait too long.  A recent decision ruled that waiting 10 days was a sign that an employee had condoned the changes.

While hesitation to move forward with a constructive dismissal claim is understandable, there is a consequence to waiting.  Wait too long, and your right to claim constructive dismissal may be lost.  Without immediate action on your part, you may be seen to have accepted the changes made by your employer.

How can you claim constructive dismissal while you are still working?

Any unilateral substantial change to the terms of your employment, which you have not consented to, either explicitly or implicitly, could trigger a right on your part to claim constructive dismissal.  A demotion, a significant reduction in your compensation, a material change in your duties and responsibilities resulting in a loss of status – these are all common examples of a potential constructive dismissal.  In the face of such changes, continuing to work without any protest or claim against your employer may be considered as implicit consent or acquiescence to the changed employment terms.

In a recent decision, Kosteckyj v Paramount Resources Ltd, 2022 ABCA 230, Paramount unilaterally announced across-the-board reductions in salaries and benefits as part of corporate cost-cutting measures.  Ms. Kosteckyj neither expressly rejected nor accepted the salary reduction. Without saying anything, she continued to work for 3 weeks following the reduction in pay.  The company then downsized to further cut costs and she was fired. The Alberta Court of Appeal found that the fact she continued to work for three weeks after the reduction in pay was “indisputable evidence” that she had accepted the new terms of employment.  As a result, the termination pay she received from being fired was calculated based on her newly reduced salary. At the end of the day, her failure to signal her rejection of the lower salary meant that her termination package was $10,000 less than if she had expressed disagreement with the changes to pay.  A simple failure to act cost her significantly.

What does this court decision mean for you?

Substantial changes to employment terms often occur as employers try to reduce costs.  Ms. Kosteckyj’s situation likely happens to many people.

If you find yourself in this situation, remember that hesitation and inaction can be costly.  The most important thing to do is to make clear you do not agree with the changes to your employment, so you continue to work under protest.  You should also contact an experienced employment lawyer to help you assess your situation before you take the drastic step of quitting your job and claiming constructive dismissal.

If you wait too long after changes are imposed on you, you could end up being seen as having consented to the changes.  If you do not wait at all, and immediately resign out of frustration, claiming constructive dismissal, you may be seen to have simply resigned voluntarily and not be entitled to any termination pay or EI benefits.  A proper legal assessment of your situation early on will give you more certainty about whether the changes trigger a possible constructive dismissal claim and guide you on what to do next.

Consult with an Employment Law Firm  immediately because the window for action is narrow. And the stakes are high.

Ontario’s deemed Infectious Disease Emergency Leave (“Deemed IDEL“) period ended on July 30^th, 2022. This does not affect employees’ entitlement and employers are being held accountable and successfully sued for constructive dismissal for their employees.

Employers who relied on IDEL to put employees on leave are at immediate risk of substantial cost, as employees who are not returned to work can sue for constructive dismissal. And as a result of the Waksdale decision most contracts written before June 6 2020 are invalid. In practical terms, most employees with long term records of employment may be due up to 2 years, or, on average, 1 month per year of service under common law.

Leaving employees on indefinite leave has costly consequences when constructive dismissal is alleged.  It is important to seek advice from experienced counsel to craft a strategy to mitigate, if not eliminate, these liabilities.

Deemed IDEL came into being during the pandemic to provide relief to both employees and employers. For employers, Deemed IDEL was intended as a relief measure. Under certain circumstances, IDEL allowed for temporary reduction or elimination of employee hours and wages, without triggering a deemed termination, but with an obligation for the employer to return the employee to work after the end of the IDEL period. With the Deemed IDEL period ended, employers can no longer place their employees on leave indefinitely, even if the pandemic still impacts their business. that the Deemed IDEL period has ended, employers may still rely on temporary layoff provisions in Ontario’s Employment Standards Act (“ESA”) to continue to place employees on leave. However, there are significant restrictions on the length of temporary layoffs. A breach of these restrictions might be deemed as constructive dismissals under the ESA, and employees might be entitled to termination pay and other provisions if they claim constructive dismissal.

What should you do if your employees were on IDEL past July 30^th?

Employers who currently have employees on IDEL will need to decide whether to call these employees back to work, rely on ESA temporary layoff provisions to extend the time before calling them back to work, or terminate them to avoid a breach of the ESA. (Depending on whether employees’ benefits are continued or not during the layoff, there are two-time limits under the ESA for temporary layoffs.

What employers should know about temporary layoffs moving forward

The ESA does not create a right for the employer to temporarily lay off its employees, but sets the conditions for and duration of layoffs. However, unless an employer has the contractual right to do so, employees put on temporary layoff can claim constructive dismissal, notwithstanding the ESA temporary layoff provisions. Employers are warned to closely comply with the conditions for temporary layoffs to avoid potential costly claims.

On April 11, 2022, Bill 88, Working for Workers Act, was passed into law. This bill added new provisions to the Employment Standards Act, 2000 (ESA). Included in the amendments is a provision that requires employers with 25 or more employees to draft an Electronic Monitoring Policy by October 11, 2022, even if they do not engage in any monitoring.

This written policy requires employers to disclose to employees if they are being electronically monitored.  Electronic monitoring would include any form of employee monitoring that is done through electronic means and would include tracking of employee use of company issued laptops, cellphones, and emails, as well as access card tracking, GPS devices on company vehicles, and webcams in the workplace.  The key is transparency over any kind of monitoring an employer uses.

If employees are monitored, the policy must include details about the manner in which employees are being electronically monitored and the circumstances that merit monitoring; the purpose for the data and information obtained from monitoring, and how the employer will use this data.  The electronic monitoring policy must also include the date on which it was prepared, the dates of any changes that are made, and any other information as prescribed by law (as of the date of this article, there is nothing prescribed).

Employers must provide a copy to all employees within 30 days from October 11, 2022, or earlier, or within 30 days after any changes are made to the policy and retain a written copy of this policy for three (3) years.

Many parents have found themselves wondering how to balance work and child-care obligations since the COVID-19 pandemic began in 2020. Although COVID-19 intensified this issue, balancing work and child-care obligations has always been, and will continue to be, a challenge for parents.

Generally, as explained in more detail below, your employer cannot fire you due to child-care obligations. In fact, they have a duty to accommodate your child-care accommodations, which are protected by Ontario’s Human Rights Code (“Code”).

If you suspect that you have been terminated due to your child-care obligations, you should immediately contact an experienced employment and human rights lawyer as you could be entitled to both damages for breach of the Code and wrongful dismissal.

Protection under the Code

Child-care obligations are protected by the Code under family status. This means your employer must accommodate your child-care obligations up to the point of undue hardship.

However, whether your employer needs to accommodate you is contextual. The obligation to accommodate is not triggered in every instance, and it requires you to make reasonable efforts. For example, if you are asking for an accommodation due to childcare obligations, you should first make reasonable efforts to find childcare. If this proves impossible, you could ask for an accommodation.

Alternatively, if you are asking for an accommodation to attend your child’s weekly soccer game, it is unlikely that your employer is obligated to accommodate you. A key consideration is whether a failure to modify an employee’s hours or place of work would prevent them from caring for their children.

The duty to accommodate means that your employer has the obligation to change the way the workplace functions so you can fully participate in the workplace. In your case, this would mean adapting the workplace to allow you to perform both your work and child-care obligations. If you find yourself struggling to balance work and taking care of your children, you should immediately request an accommodation pursuant to the Code.

Accommodations are fluid and should be tailored to your specific situation. Common accommodations we see include:

1. Allowing you to work from home where feasible;
2. Allowing you to work alternate hours; and
3. Allowing you to take leaves from work if your child-care obligations are particularly onerous for a period of time.

Your employer must provide you with accommodations unless they can demonstrate it causes them undue hardship, and you have a legitimate reason for asking for an accommodation.  To determine if an accommodation measure creates undue hardship, both costs and health and safety risks may be considered. However, your employer cannot claim undue hardship simply because your accommodation results in some financial hardship. Rather, your employer would need to show the cost is so extreme that it seriously interferes with their business.

For example, if you can perform your work remotely, and you request this accommodation to fulfill child-care obligations, your employer cannot claim this is undue hardship. Failure to accommodate can amount to discrimination.

Your employer cannot terminate you due to child-care obligations

While your employer can always terminate you without cause, they cannot do so if it is wholly or in part due to your child-care obligations. If they were to do so, it would breach the Code, and you would be entitled to damages, in addition to the applicable wrongful dismissal damages.

If your employer is threatening to fire you because you are taking care of your children, they are likely breaching their duty to accommodate you under the Code. Further, if your employer follows through and terminates your employment due to your child-care obligations, this may not only attract damages for breach of the Code and wrongful dismissal, but possibly punitive damages as well.

Conclusion

Employers will often hide behind termination without cause to terminate employees they do not wish to accommodate. If you suspect your termination is in any way related to your child-care obligations, you should immediately consult an employment and human rights lawyer to ensure you are treated fairly.

Suspension of Federal Vaccination Mandates

As of June 20, 2022, the federal government suspended vaccination requirements in federally regulated transportation sectors and for federal government employees. The federal government maintains it will continue to follow public health advice and reinstate the COVID-19 vaccination requirements if necessary.

However, the federal government announced that it would not introduce regulations to Canada Labour Code that would make vaccination mandatory in all federally regulated workplaces. Had it done so, federally regulated employers would have certainty on this issue moving forward.

Most employers in Ontario are not impacted by this announcement because this change only applies to federally regulated workplaces. Accordingly, these changes do not mean employers should remove or repeal their vaccination policies. For the majority of Ontario employers, the Occupational Health and Safety Act (“OHSA”) outlines the obligation to take every reasonable precaution to protect employees. Moving forward, non-federally regulated employers should base any decision to remove or repeal vaccination policies on their obligations under the OHSA.

How will this impact non-federally regulated businesses?

Ultimately, in non-federally regulated workplaces it remains the employer’s decision whether to remove or repeal mandatory vaccination policies. It is also the responsibility of the employer to establish return to work practices. Some employers, such as the federal government, have indicated that their unvaccinated employees initially placed on an unpaid leave of absence will return to work. Notably, employers that wish to repeal or remove their vaccination policy can later re-introduce it if the COVID-19 situation changes.

If employers wish to keep their mandatory vaccination policies in place, they can do so. However, the federal government’s suspension of vaccine mandates weakens their position regarding unpaid leave of absence or terminations for cause due to non-compliance with their vaccination policy. This is because vaccination is no longer mandated by the federal government and, therefore, their mandatory vaccination policy may be considered unreasonable. This could result in an employee who has been placed on unpaid leave or terminated for cause successfully establishing that they were wrongfully dismissed and are entitled to pay in lieu of notice, among other things.

How will this impact federally regulated businesses?

Federally regulated employers should consult with an experienced employment lawyer to reconsider their COVID-19 vaccination policies in light of the recent changes. When assessing vaccination policies, remember the following:

1. Vaccination policies must continue to assess accommodation requests for medical or religious grounds on a case-by-case basis, and provide evidence that they have adequately engaged in the process by documenting it;
2. Employers that remove or repeal their vaccination policies should ensure they have the flexibility to seamlessly re-establish them if required by law or the changes in the COVID-19 situation;
3. Employers should consider revising their vaccination policy to be a combined vaccination and testing policy. Some employers have implemented vaccination policies where the employee must either get vaccinated or agree to being regularly tested. This less invasive policy is more likely to be consider reasonable; and
4. If appropriate, repeal and remove the vaccination policy, but keep other health and safety measures such as mandatory masking and social distancing in place.

Employees who have been recklessly terminated may claim significant damages against their employer. In Luckman v. Bell Canada, 2022 CHRT 18, a recent Canadian  Human Rights Tribunal‘s decision, the employer, Bell Canada (“Bell“), was ordered to pay more than $120,000 in damages to their former employee, Mr. Luckman, for recklessly terminating him. This is a hefty price tag for terminating an employee who had worked for only about a year.

The facts were not complicated. During Mr. Luckman’s time at Bell,  Mr. Luckman was diagnosed with cancer. As a result, he started a medical leave and returned to work. Bell set up a gradual return to work schedule to accommodate his weakened health conditions. However, Mr. Luckman felt overwhelmed by the work due to this medical limitation and raised the issue with his supervisor. Rather than provide further accommodations, Bell terminated the employment agreement, first citing performance as the reason, then altering the reason of termination to corporate restructuring. Nevertheless, HRTO member, Mr. Pannu, found Mr. Luckman’s disability (his cancer) was a factor in his termination, and thus Bell’s termination was discriminatory.

In addition to other damages’, Mr. Pannu also awarded special damages against Bell for their “reckless termination.” He found Bell’s termination was reckless as, among other reasons, even though Mr. Luckman’s medical limitations were known to Bell, no one seemed to have “considered whether firing an employee recovering from cancer surgery might be discriminatory.”

How to support your argument of discriminatory firing

While it is important for employers to accommodate employee scenarios that are under protected grounds, you need to do a number of things to protect your position should you be “recklessly” fired.

• Clearly communicate accommodation needs: As this case demonstrates, it is important for all employees to communicate any accommodation needs with employers. Document all communication via emails or notes, as they may become important for later disputes. Requesting accommodation can not only make the day-to-day less challenging at work, but it also better protects your job should you find yourself in a difficult situation. Remember that accommodation needs should be communicated over time, so your employer understands whether the accommodations set up are meeting your specific needs.
• Understand what is considered protected grounds: Termination due to job performance or corporate restructuring might still be discriminatory if protected grounds under the Canadian Human Rights Tribunal was a factor that affected your job performance and that played a role in your employer’s termination selection process during corporate restructuring.
• Consult with an experienced employment lawyer: If you feel like your job may be at risk after you have requested accommodations at work, engage a lawyer early on. As the case has shown, even sophisticated employers, such as Bell, can act recklessly. They fired an otherwise high-performance employee to boost efficiency, but the decision backfired.

On June 8, 2022, the Ontario Court of Appeal (“ONCA”) released its eagerly awaited decision in Rahman V Cannon Design Architecture, 2022 ONCA 451 (“Rahman”). The ONCA overturned the decision of Justice Dunphy at the Ontario Superior Court (“ONSC”), which upheld an otherwise illegal termination provision because the employee sought legal advice prior to signing her employment contract.

The key takeaway for employers is that the best way to protect against costly wrongful dismissal claims is by reviewing and updating your employment agreements, or face the consequences.

Rahman at the Ontario Superior Court

Justice Dunphy’s initial decision gave employers a glimmer of hope following the ground-breaking case Waksdale v Swegon North America Inc. (“Waksdale”), which invalidated many termination provisions in Ontario. In Waksdale, the ONCA concluded that if any of the provisions of the entire termination clause fail to comply with the Employment Standards Act (“ESA”), then all its provisions will fail. Practically, this means that because many “for cause” termination provisions are unenforceable, the entire termination clause is unenforceable, and employers cannot rely on it to limit an employee’s entitlement to common law reasonable.

Rahman gave employers a lifeline following Waksdale because it supported employers’ arguments that termination provisions should be strictly interpreted in favour of employees. At the ONSC, Justice Dunphy rejected the Plaintiff’s argument that the “just cause” termination provision in the employment agreement amounted to contracting out of the ESA, distinguishing it from Waksdale. Justice Dunphy concluded that a strict or adverse construction approach to the termination provisions in Rahman should not be applied because, among other things:

• The employee was reasonably sophisticated and had the benefit of independent legal advice;
• There was no marked inequality of bargaining power; and
• The termination provisions were negotiated.

This decision meant that, even if a termination provision was unenforceable based on the language of the employment agreement, employers could still rely on the surrounding context to argue the termination provision is enforceable.

Rahman at the Ontario Court of Appeal

Unfortunately for employers, the ONCA overturned Justice Dunphy’s decision. The ONCA stated that subjective considerations should not override the plain language of the termination provisions. Ultimately, it is the wording of the termination provision which determines whether it contravenes the ESA, not contextual considerations.

Why this decision matters for your business

Most importantly, this decision reinforces that your best defence against costly wrongful dismissal claims is enforceable termination provisions. As noted above, if your employment agreements are more than a few years old, there is a real risk that Waksdale rendered the termination provisions unenforceable.

Clients often ask us what the difference is between common law reasonable notice and minimum entitlements under Ontario’s Employment Standards Act (“ESA”), or any other employment standards legislation. The distinction is an important one to understand as it guides your entitlements upon termination.

Your employer may state your severance package satisfies your ESA minimum entitlements to notice and severance. Do not sign anything before consulting an employment lawyer, because you could be entitled to common law reasonable notice. What is the difference? Up to 4 times the amount in ESA, possibly more. For long term employees, it could be up to 26 months in salary and benefits.

I do not have a written employment agreement. What am I entitled to?

If you do not have a written employment agreement you are entitled to common law reasonable notice. This means you are entitled to significantly more than your ESA entitlements. In our experience, many long-term employees do not have written employment agreements.

In this case, you should immediately consult an employment lawyer upon termination. Most employers will attempt to offer far less than what you are entitled to under the common law.

What are my entitlements if I have an employment agreement?

If you have a written employment agreement, your entitlements will depend on whether your employment agreement has valid termination provisions. If the termination provisions are enforceable, you may only be entitled to your ESA minimum entitlements. Bear in mind that many termination provisions in Ontario are now unenforceable because of the decision in Waksdale v Swegon North America Inc.

Experienced employment lawyers will attack the written employment contract and argue the termination provisions are unenforceable, therefore entitling you to common law reasonable notice.

What is common law reasonable notice?

Upon termination of employment without cause you are presumptively entitled to common law reasonable notice. However, this can be rebutted and limited to a lesser amount (as little as your minimum entitlements under the ESA) through a written employment contract with enforceable termination provisions. Absent a written employment contract with valid termination provisions, you are entitled to common law reasonable notice if terminated without cause.

Common law reasonable notice is calculated based on the “Bardal factors” set out in Bardal v The Globe and Mail Ltd.:

1. Age of the employee;
2. Length of service;
3. Character of employment; and
4. Availability of similar employment.

Your entitlement to common law reasonable notice could be up to, and in special circumstances in excess of 24 months.

Common law reasonable notice is based on total compensation, meaning you are entitled to all benefits, such as bonus or pension contributions, that you would have received had your employer provided you with the appropriate amount of common law reasonable notice.  Employers will try to limit these entitlements by explicitly stating in writing that those benefits will not be provided during the notice period. You should always review and carefully consider, with guidance from your lawyer, any document your employer asks you to sign. If the document mentions changes to bonus plans or the terms of your employment, it is always strongly advised to consult with an employment lawyer to ensure you are not signing your rights away.

Common law reasonable notice, or pay in lieu thereof, is not a “no strings attached” proposition. You have an obligation to mitigate your losses following termination. Practically, this means you must try to find a new job to limit the losses that stem from your termination. Therefore, in theory, generally income earned during the common law reasonable notice period will be balanced against any award you receive. An experienced employment lawyer can negotiate a settlement structure that protects against this situation.

What is termination pay and severance pay under the ESA?

The ESA governs employment standards in Ontario. Every jurisdiction has its own employment standards legislation.

If the presumption of common law reasonable notice is rebutted your entitlement to common law reasonable notice upon termination can be limited to your minimum statutory entitlements to notice or termination pay, severance pay (if applicable), and benefits continuation.

In Ontario, statutory notice or termination pay is 1 week per year of service, up to 8 weeks. You are also entitled to severance pay under the ESA if you have worked for your employer for more than 5 years and your employer has a global annual payroll of $2.5 million. Severance pay is calculated as 1 week of pay per year of service up to 26 weeks. However, at common law your entitlement could reach 24 months (or 2 years) or, on average, 1 month per year of service.

As you can see, there is a significant difference between your entitlements upon termination at common law and under the ESA. #ESA #Terminated #CommonLaw