Employment Contracts

Subscribe to Employment Contracts via RSS

Special thanks to our articling student Andie Hoang for contributing to this update.

As we wrap up 2024 and look forward to 2025, here are 10 key developments Canadian employers should track:

1. Changes to Termination Notice Periods for Federal Employees

In February 2024, amendments to section 230 of the Canada Labour Code came into effect requiring federal employers to provide their employees with a graduated notice of termination based on the length of an employee’s continuous employment. Prior to this, employers had to provide a minimum of two weeks’ notice of termination or pay in lieu of notice to an employee who had completed at least three months of continuous employment with said employer.

The amendments also require employers to provide a written statement of benefits to employees who have been terminated. Prior to these amendments, this was only required for group terminations, but now will also apply to individual terminations. These statements must outline an employee’s right to vacation benefits, wages, severance pay and any other benefits and pay arising. A federal employer’s obligation to pay severance pay under section 235 of the Code, however, remains unchanged. 

Please see our full blog on the updated amendments and notice lengths, “Reminder for Federal Employers: Changes to Termination Notice Period in Effect NOW.”

2. New Obligations for Ontario Employers Under Bill 149 – Working for Workers Four Act

On March 21, 2024, Bill 149 – Working for Workers Four Act received Royal Assent as part of a series of legislative initiatives that have been introduced under the “Working for Workers” banner since 2021. Each piece of legislation in this series seeks to address various contemporary issues within Ontario workplaces. Bill 149 introduces significant changes to Ontario’s employment law, including:

  • Job Postings: Employers who publicly advertise job postings are now required to disclose either the expected compensation or a range of expected compensation. The range of expected compensation shall be subject to conditions, limitations, restrictions or requirements as may be prescribed. Further, employers will also be required to disclose in job postings whether they used artificial intelligence in the hiring process (i.e., if AI was used to screen, assess or select applicants for the position). These new requirements will come into force on January 1, 2026.
  • Tips and Tip Policies: If an employer has a policy in respect of tip pooling, they are required to both post and keep posted a copy of their policy in a conspicuous place in their establishment where the policy is likely to come to the attention of employees. Further, employers are required to retain copies of any written tip pooling or sharing policy for a period of three years after it is no longer in effect.

The Act brings about a number of additional changes that will be relevant for employers, which are summarized in our blog post, “* UPDATE * Ontario Passes Bill 149, Working for Workers Four Act, 2024, Imposing Pay Transparency Requirements Among Other Things.”

3. Timely Judicial Reminder re Termination Provisions and Fixed-Term Contracts

The Ontario Superior Court of Justice in Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, delivered a decision that will impact the way employment agreements are drafted going forward. The Plaintiff was employed by the Defendant Township on a fixed-term contract. However, with 101 weeks remaining in her contract term, the Township terminated her employment without cause. Following this, the Plaintiff sued the Township for wrongful dismissal, arguing that the termination clause in their contract was unenforceable and that they were therefore entitled to reasonable notice of termination. Ultimately, the Court found the termination provisions unenforceable as the contract did not comply with the Employment Standards Act, 2000, for three reasons.Continue Reading Top 10 Canadian Labour & Employment Law Developments of 2024

In the recent case of Bertsch v. Datastealth Inc., 2024 ONSC 5593 (Bertsch), an Ontario court upheld a termination provision that did not specify every detail. While recent decisions suggest that such provisions may have to be flawless to be enforceable, Bertsch is a welcome decision showing that employers do not necessarily have to meet that high bar to protect themselves.

Key Takeaways

Bertsch reminds employers of the importance of including clear and compliant termination provisions in employment agreements. Ontario employers should review their agreements to ensure they meet the requirements of the Employment Standards Act, 2000 to avoid potential legal challenges. Employers should continue to confirm their termination provisions are:

  1. Clear and unambiguous to avoid disputes and potential invalidation by the courts.
  2. Compliant with the ESA and its regulations.
  3. Inclusive of language stating that compliance with the ESA and whatever other entitlements are listed in the employment agreement satisfy any common law notice of termination or pay in lieu thereof.

Bertsch demonstrates that while courts will continue to closely scrutinize termination provisions in employment agreements, employers must only ensure that the provisions are legal and unambiguous. This provides some relief for Ontario’s employers by indicating that they do not necessarily have to rely on “perfect” termination clauses that reference all scenarios and laws in their employment agreements to enforce them.

Even with this positive decision for employers, we continue to encourage all Canadian employers to assess the enforceability of termination provisions in existing employment agreements.Continue Reading Don’t Let Perfect Be the Enemy of Excellent: Ontario Court Validates Termination Clause that is Unambiguous and Legal

Special thanks to co-presenter Sarah Mavula.

Quebec’s Bill 96 significantly expanded existing French language requirements under Quebec’s Charter of the French language, including new translation requirements for a wide range of employment documents. Similarly, the treatment of commercial standard form contracts (or contracts of adhesion) must now be translated into French first, even if the parties agree to…

“Stay-or-pay” clauses, a growing practice in the US, involve penalizing employees who break the tenure of their employment contract. Check out this recent article from Human Resources Director, “Stay-or-pay clauses in Canada? Experts weigh in on the U.S. trend of charging employees who quit” with insight from our own Andrew Shaw.

Click here to…

With special thanks to our presenters Benjamin Ho (United States),  Matías Herrero (Argentina), Leticia Ribeiro (Trench Rossi Watanabe, Sao Paulo*), Maria Cecilia Reyes (Colombia) and Liliana Hernandez-Salgado (Mexico).

In this session, US-based multinational employers with business operations in the Americas region hear directly from Benjamin Ho and local practitioners on the major developments they…

Join us for a four-part webinar series as our US moderators welcome colleagues from around the globe to share the latest labor and employment law updates and trends. US-based multinational employers with business operations in Asia Pacific, Europe, the Middle East and Africa, and the Americas regions will hear directly from local practitioners on the…

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…

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.

Factual background

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

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.

Consideration…

In an encouraging decision for employers, the Ontario Court of Appeal clarified that a corporation is not a common employer just because it “owned, controlled or was affiliated with another corporation that had a direct employment relationship with the employee”. In O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385, the Court affirmed that the…