We are pleased to share a recent Benefits Canada article, “Employers can’t rely on original termination clauses when employee responsibilities increase: court,” with quotes from George Avraam. A recent Ontario Court of Appeal decision upheld a motion judge’s award of over $400,000 to an employee on the basis of the changed substratum doctrine. The case
Compensation & Benefits
The Changed Substratum Doctrine Strikes Again – Ontario Court of Appeal Upholds Massive Damages Award Where Employee’s Duties Significantly Expanded
Special thanks to Oscar Ramirez (articling student in our Toronto office) for co-authoring this blog.
In Celestini v. Shoplogix Inc., 2023 ONCA 131, the Ontario Court of Appeal recently upheld a motion judge’s award of over $400,000 to an employee on the basis of the changed substratum doctrine.
What is the changed substratum doctrine?
The changed substratum doctrine recognizes that the employment relationship evolves over time such that sometimes it may be inappropriate to apply the provisions of an out-dated employment contract to a job that has changed significantly. The doctrine applies in situations where the employee’s duties have fundamentally expanded to a point where the underlying employment contract has substantially eroded, or it can be implied that the employment contract could not have been intended to apply to the employee’s latest role.
In 2005, Mr. Celestini became Shoplogix Inc.’s Chief Technological Officer through a finance arrangement with a venture fund. As part of the deal, he would step down as Shoplogix’s CEO and serve as its CTO under a written employment contract, which he signed in 2005. The employment contract limited Mr. Celestini’s entitlements upon termination of employment.
In 2008, Mr. Celestini and Shoplogix entered into an Incentive Compensation Agreement (“ICA“) which significantly altered Mr. Celestini’s bonus entitlements. Shoplogix did not amend the 2005 employment contract at this time.
There was an expansion of Mr. Celestini’s workload and responsibilities that coincided with the execution of the ICA and a change in leadership. His new responsibilities included: “managing important aspects of sales and marketing; directing managers and senior staff who were reassigned to report to him; travelling to pursue international sales; handling all of the company’s infrastructure responsibilities; and soliciting investment funds.”
In 2017, Shoplogix terminated Mr. Celestini without cause. Shoplogix took the position that Mr. Celestini’s rights were governed by the employment contract he signed in 2005. But Mr. Celestini argued that the termination provisions in the 2005 contract were unenforceable because of the substantial changes to his position, and he was therefore entitled to reasonable notice at common law. He claimed he was entitled to common law damages for wrongful dismissal on the basis that Shoplogix breached the implied term to provide reasonable notice of termination.…
Continue Reading The Changed Substratum Doctrine Strikes Again – Ontario Court of Appeal Upholds Massive Damages Award Where Employee’s Duties Significantly Expanded
ABCA Contemplates Enhanced Gatekeeping in Employee Compensation Class Action Certification
Special thanks to Brendan O’Grady (a senior associate in our Litigation & Government Enforcement Practice Group) and Anton Rizor (articling student in our Toronto office) for co-authoring this blog.
In Flesch v Apache Corporation, the Alberta Court of Appeal (“ABCA”) upheld the certification of an employee class action arising out of the cancellation of…
For Your Consideration – Update Employment Agreements Before End of Year Bonuses
As we near the end of 2022 and bonus season is right around the corner, now is a great time for employers to review and update their employment agreements. In order to make changes to an existing employment agreement, the employer must give the employee “consideration.” Without consideration, the changes would not be enforceable.
Enhanced Leaves of Absence under the Canada Labour Code as Bill C-3 Passes
The federal government passed Bill C-3, An Act to amend the Criminal Code and the Canada Labour Code on December 17, 2021. While Bill C-2 focused on providing support for reasons specifically related to COVID-19, Bill C-3 enhances paid sick leave and bereavement leave under the Canada Labour Code (the “CLC”) not specific to…
Additional Relief and Leaves of Absence for Reasons Related to COVID-19: Bill C-2
Just before the end of 2021, the Canadian Government passed Bill C-2, An Act to provide further support in response to COVID-19. Amongst other things, the Bill introduced the Canada Worker Lockdown Benefit Act, amended eligibility requirements under the Canada Recovery Benefits Act, and amended the Canada Labour Code to update…
Federal Government Announces Extension of COVID-19 Supports
On July 30, 2021, the Federal Government announced its proposal to extend certain COVID-19 support programs, including the Canada Emergency Wage Subsidy (“CEWS”), Canada Recovery Benefit (“CRB”), the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit until October 23, 2021.
Summary of Key Changes in the Federal Government’s Announcement
The key changes from…
BC Court Deducts CERB from Wrongful Dismissal Award
In a recent decision, the British Columbia Supreme Court (“BC Court“) ruled that Canada Emergency Response Benefit (“CERB”) payments earned during the notice period would be deducted from wrongful dismissal damages. This decision stands in stark contrast to that recently issued in Ontario, where the Superior Court of Justice (“Ontario Court“)…
The Future of Work: Renewal Strategies for a Transformed Workforce
Companies are facing critical business challenges in regard to their most important asset – their people. While workforce transformation is not a new concept for global organizations, the pandemic has forced us to rapidly adapt our standard ways of working and how we engage with employees to ensure the long-term viability of the business. We…
Ontario Court of Appeal: Pay Equity Maintenance Requires Ongoing Reference to Male Comparators. PART II: How does the Ontario Court of Appeal’s recent decision affect pay equity maintenance obligations?
In March of 2021, the Ontario Court of Appeal released a long-awaited and precedent-setting decision in Ontario Nurses’ Association v. Participating Nursing Homes, 2021 ONCA 148 (“Participating Nursing Homes“).
Contrary to practices previously endorsed by the Pay Equity Commission, the Court of Appeal determined that public sector employers who achieved pay equity using the “proxy method” have an ongoing obligation to revisit comparator information of the “proxy employer” to maintain pay equity. The matter has been remitted to the Pay Equity Hearings Tribunal (the “Tribunal”) to specify what procedures should be used to ensure that pay equity is maintained under “proxy plans” with ongoing reference to male comparators.
This is the second of a two-part series. Part One provided an overview of the pay equity maintenance obligation. This Part Two will explain how the Court of Appeal’s decision in Participating Nursing Homes affects the pay equity maintenance obligation for “proxy employers” in the broader public sector.
Continue Reading Ontario Court of Appeal: Pay Equity Maintenance Requires Ongoing Reference to Male Comparators. PART II: How does the Ontario Court of Appeal’s recent decision affect pay equity maintenance obligations?