Termination of Employment

Summary

On November 14, 2022, Bill 26 – Strengthening Post-secondary Institutions and Students Act, 2022, passed second reading in the Ontario legislature. If passed, Bill 26 will be effective on July 1, 2023, and will transform how post-secondary institutions and private career colleges address sexual misconduct by faculty and staff.

Bill 26’s key changes

In September 2022, the Ontario Court of Appeal in Pavlov v. The New Zealand and Australian Lamb Company Limited (“Pavlov“) confirmed that an employer may be liable for a longer notice period, even for a short-term employee, based on prevailing economic factors beyond the parties’ control. In this case, it was COVID-19.

Background

Employers are being faced with difficult decisions about potentially reducing their headcount to eliminate redundant positions in light of a shift in the economic climate and an increased focus on business efficiency.

With any termination comes liability.

In this 3-part series of In Focus videos specific to Reductions in Force, our Labour and Employment

We are pleased to share a recent Benefits Canada article, “Employers seeking to withhold termination entitlements must prove wilful misconduct pre-planned: Ontario court,” with quotes from George Avraam. A recent Ontario Court of Appeal decision raises the bar for employers seeking to withhold minimum entitlements under the Employment Standards Act from employees dismissed for cause.

To wrap up 2021, we have highlighted key developments in Canadian labour and employment law, with a focus on Ontario:

  1. Bill 27 – Working for Workers Act: On December 2, 2021, the Ontario government passed the Working for Workers Act, 2021 (the “Act“), which introduces significant changes to Ontario’s employment law, including:
    • A Right to Disconnect from Work Policies: Employers subject to the Employment Standards Act, 2000 (the “ESA“) with 25 or more employees must have a written policy which outlines employees’ right to disconnect from work. The term “disconnecting from work” means not engaging in work-related communications (e.g. emails, calls) and not sending or reviewing any messages, so that employees are free from the performance of work outside of normal working hours. Employers have six months from December 3, 2021 to implement the policy.
    • No Non-Compete Agreements: Employers subject to the ESA are prohibited from entering into non-compete agreements with employees. Non-compete agreements are those that prohibit the employee from working for or running a competitive business after the employment relationship has ended.

There is an exception to the prohibition on non-competition agreements in the event of a sale or lease of a business and for executive-level employees.

This amendment to the ESA is deemed to be in force as of October 25, 2021, and all non-compete agreements entered into before this date will remain unaffected. Non-solicitation, confidentiality, and assignment of intellectual property agreements are still permissible.

The Act brings about a number of additional changes that will be relevant for employers, which are fully summarized here.

Continue Reading Top 10 Canadian Labour & Employment Law Developments of 2021

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“)

Following almost a year of uncertainty, the Ontario Superior Court finally clarified that temporary layoffs during the COVID-19 pandemic can amount to constructive dismissal under the common-law. Ontario employers should take note of this important decision if they have or are considering temporary staffing cuts, including temporary reductions in hours.
Continue Reading COVID Layoffs Can Lead to Employer Liability, Ontario Court Says

There is a presumption that an employee is entitled to common law reasonable notice upon termination of employment without cause. Employers may rebut this presumption through an enforceable termination clause that, at the very least, provides Employment Standards Act, 2000 (“ESA”) minimums, and displaces an employee’s right to common law reasonable notice.

In the past year, the Ontario Court of Appeal made it clear that it will find as unenforceable a termination clause where even the slightest imprecision could result in an unlawful contract. This trend started in Andros v. Colliers Macaulay Nicolls Inc., where the Court narrowly interpreted a failsafe clause as applying only to the first part of a termination clause but not the second. In Rossman v. Canadian Solar Inc., the same Court concluded that savings provisions, such as a failsafe provision, cannot save employers who attempt to contract out of the minimum standards prescribed by employment standards legislation. And most recently, in Waksdale v. Swegon North America Inc., the Court struck down a valid “without cause” termination sub-clause because the “for cause” termination sub-clause was unenforceable. In short, the Court concluded that where one of the sub-clauses is unenforceable, the entire termination clause must fall and it will not be saved by a severability clause.

Continue Reading Another Termination Clause Bites the Dust

The Ontario Court of Appeal released yet another decision on the interpretation and enforceability of termination clauses: Rossman v. Canadian Solar Inc., 2019 ONCA 992. Recent appellate decisions on this matter have been inconsistent on this issue and unfortunately, Rossman is more bad news for employers. Nevertheless this decision provides guidance that should be considered in reviewing and drafting termination provisions in employment contracts.
Continue Reading Saving Provisions Unable to Save Termination Clauses