Category: Employment Law

Introduction  

In 2024, the Ontario legislature passed two workplace law amendment bills – Bill 149, Working for Workers Four Act, 2024,¹ and Bill 190, Working for Workers Five Act, 2024.² Collectively, Bill 149 and Bill 190 resulted in Part III.1 of the Employment Standards Act (the “ESA”)³ and six new rules related to job postings and hiring new employees. This blog addresses the upcoming changes and how employers can prepare.  

To What and To Whom Do These Requirements Apply?  

The upcoming requirements apply to publicly advertised job postings for employers with 25 or more employees on the day the job posting is published online. As defined under Ontario Regulation 476/24: Rules and Exemptions Re Job Postings (“O. Reg 476/24”), a publicly advertised job posting is “an external job posting that an employer or a person acting on behalf of an employer advertises to the general public in any manner.” ⁴ Publicly advertised job postings do not include:  

• A general recruitment campaign that does not advertise a specific position;  

• A general help wanted sign that does not advertise a specific position;  

• A posting for a position that is restricted to current employees; and  

• A posting for a position for which work is to be: (a) performed outside Ontario or (b) performed in and outside Ontario, and the work performed outside Ontario is not a continuation of the work performed in Ontario. 

What Are the New Requirements?  

Starting January 1, 2026, employers must:  

1. Disclose the expected compensation or compensation range.  

Employers must include the expected compensation or a range for the expected compensation in the publicly advertised job posting.⁵ If providing a range of expected compensation, this range must not exceed $50,000.00.⁶ This requirement is exempt for positions where the expected compensation exceeds, or the range of expected compensation ends at, $200,000.00 annually.⁷ To determine whether a position is above or below this limit, employers should consider non-discretionary bonuses and/or other monetary compensation that the employee is likely to earn in addition to the annual salary.  

2. Not require Canadian experience.

Employers are prohibited from including any requirement(s) related to Canadian experience in the publicly advertised job posting or any related application form.⁸  

3. Disclose the use of artificial intelligence.  

Employers must disclose if they are using artificial intelligence to screen, assess, and/or select applicants in the publicly advertised job posting.⁹ Artificial intelligence is defined as “a machine-based system that, for explicit or implicit objectives, infers from the input it receives in order to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments.”¹⁰  

4. Disclose existing vacancy status.  

Employers must include a statement in the publicly advertised job posting informing applicants whether the posting is for an existing vacancy.¹¹  

5. Inform Interviewees about interview results.  

Employers must inform the applicant whether a hiring decision has been made for the position.¹² This information must be provided within 45 days of the applicant’s interview or last interview if there were multiple interviews. ¹³ This information can be provided in person, in writing, or through technology.¹⁴ Interview is defined as “a meeting in person or a meeting using technology, including but not limited to teleconference and videoconference technology, between an applicant who has applied for a publicly advertised job posting and an employer or a person acting on behalf of an employer where questions are asked and answers are given to assess the applicant’s suitability for the position, but does not include preliminary screening before the selection of the applicant for such a meeting.”¹⁵  

6. Retain a copy of the job posting and information.  

Employers must retain copies of every publicly advertised job posting and associated applications for 3 years after the posting is removed from public access.¹⁶ Employers must also retain a record of the information provided to interviewing applicants for 3 years after the interview.¹⁷  

How Can Employers Prepare To Ensure Compliance With These Requirements?  

To prepare for this transition, employers can:  

1. Inform employees involved in the hiring process about the new requirements.  
2. Determine if and how artificial intelligence is used in the hiring process.  
3. Develop a clear compensation range for common positions and determine to which positions the new requirements will and will not apply. 
4. Review current job posting templates to ensure compliance. Briefly, this includes:  
   1. Adding the compensation or a range of compensation;  
   2. Eliminating any requirement of Canadian work experience;  
   3. Adding a statement addressing whether the posting is for a current or future position; and  
   4. Adding a statement regarding the use of artificial intelligence (if it is used to screen, assess, or select applicants).
5. Implement a process to ensure timely communication of hiring decisions to applicants who interviewed for the position. 
6. Implement a process to retain copies of publicly advertised job postings and the information provided to applicants during the interview. This may include creating a script for the information that will be provided during the interview.  

If you would like more information about these amendments or would like legal advice to ensure your place of work follows these new requirements, please contact experienced employment lawyer, Marty Rabinovitch, of Devry Smith Frank LLP at 416-446-5826 or marty.rabinovitch@devrylaw.ca. 

This blog was co-authored by summer law student Yashika Shroff.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

1 Hon. David Piccini, “Bill 149, Working for Workers Four Act, 2024,” Legislative Assembly of Ontario [Bill 149]. 

2 Hon. David Piccini, “Bill 190, Working for Workers Five Act, 2024,” Legislative Assembly of Ontario [Bill 190]. 

3 Employment Standards Act, 2000, SO 2000, c 41, s. 2(1) [ESA]. 

4 Ontario Regulation 476/24: Rules and Exemptions Re Job Postings [O. Reg 476/24]. 

5 ESA, supra note 3, s. 8.2. 

6 O. Reg 476/24, supra note 4, s. 4.  

7 O. Reg 476/24, supra note 4, s. 3.

8 ESA, supra note 3, s. 8.3. 

9 ESA, supra note 3, s. 8.4. 

10 O. Reg 476/24, ibid note 4, s. 2.(1). 

11 ESA, supra note 3, s. 8.5. 

12 ESA, supra note 3, s. 8.6. 

13 O. Reg 476/24, supra note 4, s. 5. 

14 Ibid. 

15 O. Reg 476/24, supra note 4, s. 2.(2). 

16 ESA, supra note 3, s. 15(7.1). 

17 ESA, supra note 3, s. 15(7.1.1). 

In the February 11, 2025 decision of Baker v. Van Dolder’s Home Team Inc., the court confirmed that a termination provision permitting an employer to terminate an employee “at any time” without cause contravenes the Employment Standards Act, 2000 (ESA) and is therefore unenforceable.[1] 

FACTS 

Frederick Baker sued his former employer, Van Dolder’s Home Team Inc., for wrongful dismissal after his employment was terminated without cause on May 24, 2023.[2] The employment contract contained “without cause” and “with cause” termination provisions. 

Termination “Without Cause” 

The contract contained the following “without cause” termination provision: 

“We may terminate your employment at any time, without just cause, upon providing you with only the minimum notice, or payment in lieu of notice and, if applicable, severance pay, required by the Employment Standards Act…” [3]  

“Without Cause” Termination Provision Unenforceable 

The court determined that the “without cause” termination provision was unenforceable.[4] In reaching this decision, Justice Sproat followed the trial and appellate decisions in Dufault v. The Corporation of the Township of Ignace (previously discussed in blog entitled Court of Appeal Declines to Comment on the “Without Cause” Termination Provision in Dufault v. Ignace (Township).  In Dufault, language permitting an employer to terminate an employee’s employment “at any time” and in the employer’s “sole discretion” was found to invalidate the termination clause.[5] The court upheld this conclusion in Baker.[6]     

As the “without cause” termination provision was found to be in contravention of the ESA, the court held that the entire termination scheme was unenforceable.[7]  The employee was therefore entitled to a reasonable notice period at common law.   

TAKEAWAY 

Employers should consult with their employment lawyers to ensure that the termination provisions in their employment contracts are enforceable.   

Employees should also obtain legal advice prior to signing an employment contract and in the event of termination, to determine whether any termination provisions in their contract may be unenforceable, which would result in an increased severance entitlement.   

To learn more about the enforceability of termination provisions in employment contracts, please contact experienced employment lawyer, Marty Rabinovitch, of Devry Smith Frank LLP at 416-446-5826 or marty.rabinovitch@devrylaw.ca.

This blog was co-authored by summer law student Emma Wilson.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

[1] 2025 ONSC 952 (https://canlii.ca/t/k9dwf) [Baker, ONSC] 

[2] Ibid at para 4.  

[3] Ibid at para 3. 

[4] Ibid at para 12. 

[5] Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 (https://canlii.ca/t/k46k4) at para 46 [Dufault, ONSC].  

[6] Baker, ONSC, supra at para 12. 

[7] Waksdale v. Swegon North America Inc., 2020 ONCA 391(https://canlii.ca/t/j89s5) at para 10. 

On December 19, 2024, the Court of Appeal released their highly anticipated decision in Dufault v. Ignace (Township).[1] The Court dismissed the appeal and confirmed that the termination provision was unenforceable; however, they declined to comment on the enforceability of the “without cause” termination provision.

Facts

The plaintiff employee signed a fixed-term employment contract with the defendant employer (the “Contract”). The Contract began in November 2022, and was set to end over two years later on December 31, 2024.

The Contract contained the following “with cause” termination provision:

“4.01 The Township may terminate this Agreement and terminate the Employee’s employment at any time and without notice or pay in lieu of notice for cause. If this Agreement and the Employee’s employment is terminated with cause, no further payments of any nature, including but not limited to, damages are payable to the Employee, except as otherwise specifically provided for herein and the Township’s obligations under this agreement shall cease at that time. For the purposes of this Agreement, “cause” shall include but is not limited to the following:

(i) upon the failure of the Employee to perform the services as hereinbefore specified without written approval of Municipal Council and such failure shall be considered cause and this Agreement and the Employee’s employment terminates immediately;

(ii) in the event of acts of willful negligence or disobedience by the Employee not condoned by the Township or resulting in injury or damages to the Township, such acts shall be considered cause and this Agreement and the Employee’s employment terminates immediately without further notice.”

The Contract also contained the following “without cause” termination provision:

“4.02 The Township may at its sole discretion and without cause, terminate this Agreement and the Employee’s employment thereunder at any time upon giving to the Employee written notice as follows:

(i) the Township will continue to pay the Employee’s base salary for a period of two (2) weeks per full year of service to a maximum payment of four (4) months or the period required by the Employment Standards Act, 2000 whichever is greater. This payment in lieu of notice will be made from the date of termination, payable in bi-weekly installments on the normal payroll day or on a lump sum basis at the discretion of the Township, subject at all times to the provisions of the Employment Standards Act, 2000.

(ii) with the exception of short-term and long-term disability benefits, the Township will continue the Employee’s employment benefits throughout the notice period in which the Township continues to pay the Employee’s salary. The Township will continue the Employee’s short-term and long-term disability benefits during the period required by the Employment Standards Act, 2000 and will pay all other required accrued benefits or payments required by that Act.

(iii) all payments provided under this paragraph will be subject to all deductions required under the Township’s policies and by-laws.

(iv) any further entitlements to salary continuation terminate immediately upon the death of the Employee.

(v) such payment and benefits contributions will be calculated on the basis of the Employee’s salary and benefits at the time of their termination.”

The plaintiff was terminated without cause on January 26, 2023, almost two years prior to the end of the Contract. The defendant provided the plaintiff with two weeks’ of termination pay in lieu of notice and continued her benefits for two weeks, in accordance with her minimum statutory entitlements under the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”).

Motion Decision

The plaintiff alleged that the termination provisions in the Contract were illegal and unenforceable; as such, she was entitled to a common law notice period. The plaintiff moved for summary judgment for damages for the duration of her fixed-term contract.

Justice Pierce agreed. In the motion decision, [2] she briefly reviewed the legal principles governing the enforceability of employment contracts, including:

• Employees have less bargaining power than employers when employment agreements are made, as employees rarely have enough information or leverage to bargain with employers on an equal footing.
• Employees are likely unfamiliar with the minimum standards in the ESA and may not challenge unlawful termination clauses.
• The ESA is remedial legislation designed to protect employees; as such, courts should favour an interpretation of the ESA which encourages employers to comply with the Act and extend its protections to employees.
• Termination clauses should be interpreted to encourage employers to draft ESA-compliant employment agreements. If an order to comply is the only consequence for drafting a non-compliant clause, then employers will have little incentive to comply.
• A termination clause will rebut the presumption of reasonable notice only if its wording is clear.
• If a termination clause is ambiguous, then courts should interpret it in a way that gives the greater benefit to the employee.[3]

Moreover, employment contracts must be interpreted as a whole; if any part of the termination provisions contravene the ESA, then the entirety of the termination provisions are invalid and unenforceable. This is true even if the employer does not seek to rely on the illegal provision.[4]

After reviewing the law, Justice Pierce determined that the termination provisions violated the ESA in several ways.

A. The “For Cause” Termination Provision at Article 4.01 is Unenforceable

First, Article 4.01 of the Contract stated that a “for cause” dismissal disentitles the employee to termination notice and termination pay; however, this is a common law standard that is not found within the ESA or its regulations. Instead, section 2(1)(3) of Ontario Regulation 288/01 of the ESA states that “[a]n employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” is not entitled to notice of termination or termination pay.

Here, the employer conflated the “grounds for dismissal under the ESA with a common law standard that does not appear in the ESA.”[5] Moreover, the test for “wilful misconduct” under the ESA is higher than the test for “just cause”:

“In addition to providing that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from ‘just cause’, that the conduct complained of is ‘wilful’.  Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard.  Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct.  It is, to put it colloquially, being bad on purpose.”[6]

Further, Justice Pierce found that the inclusion of “failure to perform services” in the definition of “for cause” was not the same as wilful misconduct and thus enlarged the criteria for dismissal without notice. Moreover, the Contract did not mention the saving provision of the ESA which limits “wilful misconduct” to conduct that is “not trivial.”[7]

It does not matter that the defendant did not rely on the impugned “for cause” termination provision; if any part of a termination provision contravenes the ESA, then the entirety of the provision is unenforceable.[8] Nevertheless, Justice Pierce went on to consider the enforceability of the “without cause” provision at Article 4.02 of the Contract.

B. The “Without Cause” Termination Provision at Article 4.02 is Unenforceable

Article 4.02 provided for payment of “the employee’s base salary for two weeks per year of service to a maximum of four months or the period required by the ESA, whichever is greater.” However, the section 60(1) of the ESA requires that the employee receive all “regular wages” during the notice period, which consists of more than the employee’s base salary.[9] “Regular wages” also include commissions, vacation pay, and sick days, none of which were provided for in Article 4.02.[10]

In the most controversial aspect of her decision, Justice Pierce also took issue with Article 4.02 which allowed an employer to terminate an employee “at any time” in their “sole discretion.” Justice Pierce noted that this was untrue; an employer’s right to dismiss an employee is not absolute. [11] For example, employers cannot terminate an employee:

• Pursuant to section 53 of the ESA, at the end of a protected leave, including pregnancy leave, parental leave, family medical leave, sick leave, and bereavement leave; and
• Pursuant section 74 of the ESA, in reprisal for asking an employer to comply with the ESA, inquiring about their rights under the ESA, filing a complaint with the Ministry under the ESA, exercising or attempting to exercise a right under the ESA, providing information to an employment standards officer, and inquiring or disclosing their pay to their coworkers to ensure that their employer is complying with the

Damages

Justice Pierce determined the quantum of damages with reference to the decision from Howard v. Benson Group Inc. (The Benson Group Inc.). The Court in Benson Group held that an employee who is terminated without cause in a fixed-term employment contract without an enforceable provision for early termination without cause is entitled to receive the wages and benefits for the entire duration of the contract.[12] Accordingly, she awarded the plaintiff with $157,071.57 in damages, representing 101 weeks of base salary and benefits, less the 2 weeks of salary and benefits already paid by the defendant.[13]

Appeal

The defendant appealed the motion decision and argued that the termination provisions complied with the minimum standards set by the ESA. The appeal was dismissed.

The Court decided the appeal solely on the basis of the “for cause” termination provision. The Court found that Article 4.01 contravened the ESA for the following reasons:

• The standard for wilful misconduct established in section 2(1)(3) of the Ontario Regulation 288/01 of the ESA is higher than the standard for just cause dismissal at common law. Wilful misconduct requires conduct done by employees “deliberately, knowing they are doing something wrong” and has been described as “being bad on purpose.”[14] As such, an employee terminated “for cause”, but not “wilful misconduct” remains entitled to notice of termination and termination pay; if the employer does not provide this, then they are in contravention of the ESA.[15]
• The “for cause” provision also provides a more expansive definition of “cause” that does not amount to wilful misconduct. For instance, “failure to perform services” does not amount to wilful misconduct.[16]

The Court also declined the defendant’s request to reconsider the Court of Appeal’s decision in Waksdale v. Swegon North America Inc.:

“In Waksdale, this court held that the termination provisions in an employment contract must be read as a whole. If one termination provision in an employment contract violates the ESA minimum standards, all termination provisions in the contract are invalid. This holding in Waksdale was followed in Rahman.  

As a three-judge panel, we are precluded from reconsidering the holding in Waksdale. Following the holding in Waksdale, because the “for cause” termination clause in the employment contract is void as contrary to the ESA minimum standards, all termination provisions in the contract are invalid.  Although the termination of the respondent was without cause, whether or not the “without cause” termination provision is itself contrary to the ESA minimum standards is irrelevant. Both termination clauses are invalid and unenforceable.”[17]

The Court also declined to consider Justice Pierce’s conclusions on the “without cause” provision:

“Given our conclusion that the “for cause” termination clause of the employment contract is unenforceable as contrary to the ESA and that, pursuant to Waksdale, this renders all of the termination provisions unenforceable, it is not necessary to consider the appellant’s arguments that the motion judge erred in finding the “without cause” termination clause also unenforceable as contrary to the ESA, and we expressly do not rule on that submission. The appellant argued that the motion judge’s findings in relation to the “without cause” termination clause may affect other employment contracts. In our view, resolution of the issues the appellant raises regarding the “without cause” termination clause should be left to an appeal where it would directly affect the outcome.”[18]

The Court affirmed Justice Pierce’s award of damages based on the plaintiff’s entitlement under the remainder of the fixed-term contract.

Conclusions

Unfortunately, this decision did little to address the question of the enforceability of “without cause” termination provisions which allow employers to terminate employees “at any time” in their “sole discretion.” It seems likely that this question will continue to plague employers and employment lawyers until the Court of Appeal is forced to address this issue directly.  Employers should avoid using language in termination provisions stating that an employee’s employment can be terminated “at any time” and “in the their sole discretion.”

What Does This Mean for Employers?

Both decisions in Dufault emphasize the need for clearly and carefully-drafted termination provisions in employment contracts. Dufault also demonstrates the significant risk and liability that poorly-drafted termination clauses can cause for employers, particularly those who enter into fixed-term employment contracts. To limit their exposure, employers should make it a practice to regularly review their employment contracts with an employment lawyer to ensure that they comply with the ESA and remain enforceable in the ever-changing landscape of employment law in Ontario. Moreover, pending a final resolution of the “without cause” termination provision issue, employers should err on the side of caution and avoid including the impugned terminology in their employment contracts.

What Does This Mean for Employees?

This decision reflects the employee-friendly approach that courts have taken to employment contracts in Ontario. While there is no guarantee that this interpretation will prevail in the coming years, employees with a “without cause” termination provision that allows their employers to terminate them “at any time” in their “sole discretion”  should be aware of the enforceability issues with their contract and the potential remedies available to them following their termination. Employees should consult with an employment lawyer to determine whether their contract is enforceable and whether any severance package offered to them is consistent with their legal entitlements.

If you want to learn more about the enforceability of your employment contract as an employee or employer, please contact experienced employment lawyer, Marty Rabinovitch, of Devry Smith Frank LLP at 416-446-5826 or marty.rabinovitch@devrylaw.ca.

This blog was co-authored by Articling Student, Leslie Haddock.

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon as readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.

[1] 2024 ONCA 915 [Dufault, ONCA].

[2] Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029 [Dufault, ONSC].

[3] Ibid at para 19, citing Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 at para 28.

[4] Waksdale v. Swegon North America Inc., 2020 ONCA 391 at para 10-11 [Waksdale]; Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 at para 30 [Rahman].

[5] Ibid at paras 32-38.

[6] Plester v. PolyOne Canada Inc., 2011 ONSC 6068 at para 55.

[7] Dufault, ONSC, supra at para 37.

[8] Waksdale, supra at paras 10-11 and Rahman, supra at para 30.

[9] Ibid at para 42.

[10] Ibid at paras 43-45.

[11] Ibid at para 46.

[12] Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256 at para 44.

[13] Dufault, ONSC, supra at paras 48-51.

[14] Rahman, supra at para 28.

[15] Dufault, ONCA, supra at paras 16-18.

[16] Ibid at paras 19-21.

[17] Ibid at paras 23-24 [citations omitted].

[18] Ibid at para 25.

On May 6, 2024, the Ontario Government introduced Bill 190: Working for Workers Five Act, 2024.[1] The proposed Bill seeks to provide greater protection for employees by amending the Employment Standards Act, 2000 (ESA) and the Occupational Health and Safety Act (OHSA). Most notably, the proposed amendments seek to increase the fines that individuals might face if convicted of an offence under the ESA. This blog addresses the potential impact of the proposed legislative changes on employers.

The Current Statutory Scheme

 Under the OHSA 

OHSA establishes minimum health and safety standards and practices that all parties in the workplace must follow. The Minister of Labour is responsible for the administration of the Act and appointing inspectors who assess an employer’s compliance with the OHSA.[2] Pursuant to section 66 of OHSA, any person who contravenes or fails to comply with the Act “is guilty of an offence and on conviction is liable to a fine of not more than $500,000 or to imprisonment for a term of not more than twelve months, or to both.”[3] A corporation convicted of an offence is liable to a fine of up to $2 million.[4]

Under the ESA

The ESA governs the relationship between most employees and employers in Ontario. The ESA sets out minimum entitlements of employees. It is not permissible for an employee and employee to contract out of the ESA. 

As with the OHSA, the Ministry of Labour is responsible for the administration of the Act. The Minister can appoint employment standards officers, who have broad powers to investigate possible contraventions of the Act and perform inspections to ensure that the Act is being complied with.[5] Following an investigation, employers may be convicted of contravening the ESA. thereby leaving them vulnerable to fines and even imprisonment.

Section 132 of the ESA imposes penalties on any person, including a corporation or a trade union, who violates a provision of the Act, such as failing to provide overtime pay or refusing to reinstate an employee after a protected leave. Pursuant to this section:

• If the person is an individual, they may be liable to a fine of not more than $50,000 or to imprisonment of not more than twelve months, or both;
• If the person is a corporation, it may be liable to a fine of not more than $100,000;
• If the person is a corporation that has previously been convicted of an offence under this Act:
  • if the person has one previous conviction, to a fine of not more than $250,000; or
  • If the person has more than one previous conviction, to a fine of not more than $500,000.[6]

Proposed Amendments

The proposed amendments to the OHSA include:

• Constructors and employers have new duties regarding the maintenance of washroom facilities in the workplace, including ensuring that they remain clean and sanitary and keeping records of such cleaning;
• The definitions of “workplace harassment” and “workplace sexual harassment” are expanded to include acts of virtual harassment enacted through the use of information and communications technology;
• The application of the Act is expanded to include telework performed in or about a private residence; and
• Information can be “posted”, pursuant to requirements under the Act by making them available in an electronic format if (a) employers provide workers with instructions on how to access the information and (b) if the information can be readily accessed by workers in the workplace.

Takeaways for Employers: These proposed amendments largely address the new reality of virtual work environments. An employer’s duty to ensure a safe work environment does not change when the workplace is largely virtual. Employers can also use virtual spaces to fulfill some of their obligations under the OHSA.

The proposed amendments to the ESA include:

• New obligations are imposed on employers who publicly advertise job postings, including disclosing whether the posting is for a currently vacant position and other information to be prescribed, within a set time frame of the applicant’s interview;
• Employers may require evidence reasonable in the circumstances that an employee is entitled to sick leave, but cannot require a certificate from a qualified health practitioner;
• The maximum fine that could be imposed on a person for contravening the Act is increased from $50,000 to $100,000.
  • Similarly, ESA Reg. 289/01 is to be amended to increase the fine for offenders of a third or subsequent contravention affecting multiple employees in a three-year period from $1,000 to $5,000, multiplied by the number of affected employees.

Takeaways for Employers: The proposed amendments represent a strong deterrent for potential non-compliant employers. Employers who have been sanctioned for non-compliance in the past should be especially careful to avoid repeat offences, given the heightened cost consequences associated with them. Employers should also be aware of their disclosure obligations if they use publicly advertised job postings and keep up to date with the information which must be provided. Employers may also be required to alter their policies on sick leave, given that employers are no longer permitted to require employees to produce sick notes. It is yet to be seen what will constitute “evidence reasonable in the circumstances” in the absence of documentation from a medical professional.

If you would like more information about these amendments or would like legal advice to ensure your place of work follows these new requirements, please contact experienced employment lawyer, Marty Rabinovitch, of Devry Smith Frank LLP at 416-446-5826 or marty.rabinovitch@devrylaw.ca.

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs

This blog was co-authored by Summer Law Student, Jason Corry and Articling Student, Leslie Haddock.

[1] Hon. David Piccini, “Bill 190, Working for Workers Five Act, 2024,” Legislative Assembly of Ontario, online:

www.ola.org/en/legislative-business/bills/parliament-43/session-1/bill-190.

[2] Occupational Health and Safety Act, RSO 1990, c O.1, s 6(1) [OHSA].

[3] Ibid, s 66(1).

[4] Ibid, s 66(2).

[5] Employment Standards Act, 2000, SO 2000, c 41, s 91 [ESA].

[6] Ibid, s 132.

Employees who are terminated without cause are entitled to either reasonable notice or payment in lieu of reasonable notice. This is the “Notice Period” an amount of time, or a level of compensation, to assist a dismissed employee find comparable work. At common law, the Notice Period is “reasonable notice,” which varies with the circumstances of any particular case. (For a history of the development of the common law, see Machtinger v HOJ Industries Ltd).[1] The Notice Period is also a statutory entitlement pursuant to the Employment Standards Act, 2000.[2]

This Notice Period entitlement is the “damages” experienced by the employee as a result of the wrongful termination. “Mitigation” is a limiting principle in damages, imported into the employment context from contract law.[3] In other words, when an employee has been terminated without cause, they have a legal duty and obligation to act reasonably by taking steps to replace their income.

• Read more: Employers Must Discharge Their Onus to Prove Failure to Mitigate

When it comes to fulfilling mitigation obligations, terminated employees with incapacitations or other limitations face unique challenges. For some terminated employees with physical or mental health issues, it may seem daunting or even impossible to fulfill this duty. As a recent decision of the Ontario Court of Appeal illustrates, terminated employees with incapacitations may nonetheless fulfill their mitigation obligations — even with negligible attempts to find alternate employment.

Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332[4]

In 1974, Drago Krmpotic commenced his employment with Thunder Bay Electronics Limited and Hill Street Financial Services. Mr. Krmpotic was a loyal employee who performed a broad range of physically demanding skilled tasks. After nearly thirty (30) years of devoted service, Mr. Krmpotic was terminated without cause.

Immediately prior to his termination, Mr. Krmpotic had been on medical leave to recover from back surgery, a procedure which was necessitated as a direct result of four different back injuries he sustained at work. Nonetheless, Mr. Krmpotic was terminated by his employers only hours after he returned to work following his surgery. At the time, he was sixty-nine (69) years old.

The manner of dismissal rose above the normal distress and hurt feelings caused by a dismissal. Consequentially, Mr. Krmpotic experienced anxiety, depression, fear, poor sleep, frustration, and feelings of helplessness and defeat. He also continued to suffer such physical ailments such as back pain and knee pain as a direct result of his workplace injuries.

At trial, it was determined that Mr. Krmpotic was entitled to a notice period of twenty-four (24) months, together with aggravated damages owing to the manner of dismissal.

• See related reading: Notice Periods for Employees Terminated Without Cause May Exceed Twenty Four Months if the Circumstances are ‘Exceptional’

During the notice period, Mr. Krmpotic did not mitigate his damages — he was simply unable as a result of his incapacity.

Mr. Krmpotic’s employers argued that this notice period should be reduced based on his failure to mitigate his damages. Indeed, the trial judge noted that his efforts to replace his income were “scant at best.” However, this fact was considered in context together with his age, the fact that he was recovering from back surgery related to his work, and that he was “significantly limited in his ability to perform the physical labour which his occupation demands on a daily basis.”

Notably, the latter finding that Mr. Krmpotic was substantially physically hindered was not established through any expert medical evidence, but through the evidence of Mr. Krmpotic and his immediate family members. Specifically, the trial judge accepted the evidence of Mr. Krmpotic’s wife and son that he was unable to work during the applicable notice period.

Crucially, the Court explicitly rejected the notion that physical incapacity can only be established by expert medical evidence. In fact, the Court found that the trial judge properly considered a medical report which described that while Mr. Krmpotic had some physical capacity, it was silent regarding his ability to carry on highly demanding physical labour.

On appeal, the Court did not disturb the trial judge’s finding that Mr. Krmpotic was physically incapable of performing physically demanding work during the applicable notice period. Thus Mr. Krmpotic fulfilled (or obviated) his duty to mitigate his damages due to his incapacitation. The Court also did not disturb the award of aggravated damages, despite also being in the absence of expert medical evidence.[5]

Conclusion

This case sheds light on the unique challenges faced by terminated employees with incapacitations. Despite the daunting task of seeking alternate employment, particularly for those grappling with physical or mental health issues, the Ontario Court of Appeal’s decision in Krmpotic underscores that such employees may still meet their mitigation duties.

Takeaways for employers:

• When dealing with employees, be candid, reasonable, honest and forthright, and refrain from engaging in conduct that is unfair or in bad faith by being untruthful, misleading or unduly insensitive.
• Acknowledge and accommodate the unique challenges faced by terminated employees, particularly those with incapacitations or other health issues.
• Understand that employees with limitations may face difficulties fulfilling mitigation duties and that these factors should be considered when assessing termination outcomes.

Takeaways for employees:

• Understand your entitlements regarding reasonable notice or payment in lieu of notice in case of termination without cause.
• Keep records of medical reports, communications with your employer, and any evidence supporting your physical or mental limitations or incapacitations.
• Communicate openly with your employer about any limitations or health issues which may affect your ability to seek alternate employment.

As employment law continues to evolve, cases such as this serve as important reminders of the importance of fairness, empathy, and equitable treatment in the workplace, especially during challenging transitions like terminations.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

[1] Machtinger v HOJ Industries Ltd, 1992 CanLII 102 (SCC).

[2] Employment Standards Act, 2000, SO 2000, c 41.

[3] Evans v Teamsters Local Union No 31, 2008 SCC 20 (CanLII) at para 97 [Evans], citing S M Waddams, The Law of Damages, loose‑leaf ed (Toronto: Canada Law Book, updated October 2004, release 13) at 15.70; see also: Darbishire v Warran, [1963] 1 WLR 1067 at para 1075, cited by Evans at para 97:

“…it is important to appreciate the true nature of the so-called ‘duty to mitigate the loss’ or ‘duty to minimise the damage.’ The plaintiff is not under any actual obligation to adopt the cheaper method: if he wishes to adopt the more expensive method, he is at liberty to do so and by doing so he commits no wrong against the defendant or anyone else. The true meaning is that the plaintiff is not entitled to charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss.”

[4] Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332 (CanLII).

[5] Specifically, the Court noted at para 34:

“Mental distress is a broad concept. It includes a diagnosable psychological condition arising from the manner of dismissal but is not limited to that. There is a spectrum along which a person can suffer mental distress as a result of the manner of dismissal. At one end is the person who suffers the normal distress and hurt feelings resulting from dismissal, which are not compensable in damages. At the other end of the spectrum is the person who suffers from a diagnosable psychological condition as a result of the manner of dismissal. In between those two end points, there is a spectrum along which the manner of dismissal has caused mental distress that does not reach the level of a diagnosable psychological injury.”

In O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385 (CanLII), the Ontario Court of Appeal clarified the common employer doctrine in Ontario employment law. This case emphasizes that multiple entities can be considered a single employer only if there is clear intent to establish an employer-employee relationship between the individual and the alleged common employer(s).

Overview

In October of 2014, William O’Reilly commenced a claim for six months’ wages and twelve months vacation pay against his employer(s) via myriad defendants: ClearMRI Solutions Ltd. (“ClearMRI Canada”), ClearMRI Solutions, Inc (“ClearMRI US”), Tornado Medical Systems Inc. (“Tornado”), as well as against individual directors of these corporations.[1]

All of the corporations were sued collectively as “common employers.” Tornado was the majority shareholder of ClearMRI Canada which itself had ClearMRI US as its own wholly owned subsidiary.[2] Although William did not have a written employment contract or position with Tornado, he alleged that Tornado—along with the other corporations—were all his common employers.[3] William obtained default judgment against the ClearMRI companies and successfully moved for summary judgment against the other defendants.[4] Tornado appealed.[5]

The Ontario Court of Appeal allowed Tornado’s appeal, stating that the motion judge erred in the articulation and application of the common employer doctrine.[6] In doing so, the Court of Appeal confirmed that the motion judge made an extricable error of law in concluding that Tornado was a common employer.[7]

The Lower Decision

William served as the CEO of ClearMRI Canada.[8] In 2012, William signed an agreement with ClearMRI US confirming the terms of his employment which named ClearMRI US as the employer.[9] William did not hold any formal position with Tornado.[10] Although ClearMRI US was named as William’s employer in the written agreement, the motion judge found that William was also employed by Tornado.[11]

The motion judge identified three factors that should be considered in determining whether there was a common employer: the employment agreement itself, where the effective control over the employee resides, and whether there was common control between the different legal entities.[12] Using these factors, the motion judge found that Tornado was a common employer of the plaintiff as Tornado exercised “a sufficient amount of control” over the plaintiff and found that there was common control between Tornado and the different legal entities.[13]

Tornado appealed.

Ontario Court of Appeal Decision

On appeal, the Court of Appeal determined that Tornado was not liable as a common employer. A corporation is not held to be a common employer simply because it is owned, controlled, or was affiliated with another corporation that had a direct employment relationship with the employee.[14] Rather, a corporation will be found to be a common employer only where it can be shown that there was an intention to create an employer/employee relationship between the individual and the related corporation.[15] Where there is a written employment agreement with an entity other than the alleged common employer, the court must assess how such an agreement bears on whether there was an intention to create an employment agreement with the alleged common employer.[16]

The Court of Appeal found that the motion judge failed to undertake the required analysis of the effect the written agreement had in determining whether there was intention that Tornado was a party to the employment agreement.[17] Further, the Court of Appeal found that none of the three factors that the motion judge relied on were enough to find that Tornado exercised control over the plaintiff as an employee. [18] Lastly, the Court of Appeal found that the motion judge failed to explain why the existence of a corporate relationship between Tornado and the ClearMRI companies provided an intention that Tornado was a party to the employment agreement with the plaintiff.[19]

In all, the Court of Appeal found that there was no intention between the plaintiff and Tornado to contract with Tornado as a common employer. In the absence of evidence that would show an intention to have Tornado as a common employer, the Court of Appeal allowed the appeal and set aside the summary judgment against Tornado.[20]

Analysis and Conclusion

The Court of Appeal makes it clear that whether an entity is considered a common employer is dependent on the intention of the parties in addition to factors such as the existence of an employment agreement, control over the plaintiff, and existence of a corporate relationship between the entities.

The courts will strictly interpret the application of the common employer doctrine to ensure that intercorporate relationships would not be conflated as evidence of a common employer relationship.

Employees who provide services for multiple entities should seek legal advice as they may be able to seek recovery from multiple parties. Conversely, employers should be careful of having employees perform services for or take direction from other entities unless the intention is to create a common employer relationship.

For further inquiries about the common employer doctrine in Ontario or employee-employer relationship law, contact our legal team.

 “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

This blog was co-authored by student-at-law, Abby Leung

[1] 2021 ONCA 385 at para 26.

[2] Ibid at para 15.

[3] Ibid at para 6.

[4] Ibid at para 7.

[5] Ibid at para 8.

[6] Ibid at para 11.

[7] Ibid.

[8] Ibid at para 19.

[9] Ibid at para 20.

[10] Ibid at para 19.

[11] Ibid at para 35.

[12] Ibid at para 31.

[13] Ibid at para 35.

[14] Ibid at para 50.

[15] Ibid.

[16] Ibid at para 75

[17] Ibid at para 75.

[18] Ibid at para 86.

[19] Ibid at para 91.

[20] Ibid at para 92.

By David Heppenstall and Abby Leung

Bowen v. JC Clark Ltd., 2022 ONCA 614 (CanLII)

If an employee is terminated without cause, are they entitled to discretionary bonuses? In Bowen v JC Clark Ltd,[1] two portfolio managers at JC Clark were terminated on a without-cause basis and were each given two weeks’ salary plus $577 in lieu of notice. The managers commenced a wrongful termination action against JC Clark, claiming that they were owed $1.3 million in performance fees. The managers argued that this was a term of their employment for the portion of 2014 that they worked prior to their termination. The trial judge dismissed their claim, determining that they were not entitled to be paid performance fees by JC Clark. The portfolio managers appealed the trial decision.

The Ontario Court of Appeal allowed the appeal in part. While the Court of Appeal rejected the appellants’ submissions in relation to their entitlement to performance fees, the Court of Appeal found that the trial judge erred in preventing the appellants from arguing their entitlement to a discretionary bonus. In determining what would be considered fair and reasonable calculation of bonuses given the factual context of the case, the Ontario Court of Appeal awarded each appellant $115,000. In making this decision, the Court of Appeal held that employers should exercise their discretion reasonably and in good faith and that the discretionary nature of performance bonuses does not bring with it unfettered discretion.

Background

The portfolio managers were first hired by a senior investment professional to manage a hedge fund that he created. The fund was sold to JC Clark in 2012 and as part of the sale, the senior investment professional agreed to allow JC Clark to hire the managers to manage the day-to-day activities of the fund. The investment professional entered into an agreement with JC Clark which provided that for four years after the fund’s sale, the investment professional would receive a share of the management and performance fees earned by the fund. The investment professional then entered into side agreements with the managers where he intended to share 50% of his management fees and 100% of his performance fees with them. Subsequently, the managers entered into employment agreements with JC Clark which provided that “at the total discretion of the Company, you may be eligible for a bonus at the end of each fiscal year depending on factors that include your personal performance and the profitability of the Company.”[2] The fund performed exceptionally well during the first half of 2014 under the managers’ supervision—which was when JC Clark terminated their employment without cause.

At trial, the judge dismissed the managers’ claim, finding that the investment professional had paid them the performance fees that they were entitled to for the portion of the year they worked in 2014 and that they were not entitled to the share of performance fees directly from JC Clark. In possessing this knowledge, the trial judge determined that the managers signed employment agreements which did not provide for any performance fees that would be paid by JC Clark.

The managers appealed.

Ontario Court of Appeal’s Decision

The Ontario Court of Appeal allowed the appeal in part. In reviewing the employment agreements, the Court of Appeal dismissed JC Clark’s argument that the discretionary nature of the bonus provision in the employment agreements meant that the employer was entirely unconstrained as to how discretion should be exercised. If an employment agreement provides for a discretionary bonus, the employment agreement contains an implied term that discretion will be exercised in a fair and reasonable manner.[3]

The Court of Appeal held that what constitutes a fair and reasonable exercise of discretion is dependent on the factual context of the case. The managers argued that their discretionary bonus should be calculated in comparison to two similar portfolio managers employed at JC Clark, whose fund did not perform as well as the appellants but received a greater portion of discretionary bonuses in 2014. The portfolio managers provided further evidence that in December of each calendar year, the employer considered the allocation of discretionary bonuses from a pool of funds set aside for that purpose. Distribution of discretionary bonuses was determined by a variety of factors including corporate performance, individual performance, attitude, teamwork, seniority, position within the company, and their length of employment at the company.[4] Taking these factors into account, the Ontario Court of Appeal concluded that a fair and reasonable calculation of bonuses would involve the fund’s performance and bonuses rewarded to other portfolio managers at the time. Ultimately, the Court of Appeal held that the portfolio managers were entitled to a discretionary bonus and awarded each portfolio manager $115,000 in damages.

Conclusion

This case serves as a reminder for employers that discretion should be exercised in a fair and reasonable manner, taking into account all of the factual context and objective criteria. In doing so, employers are strongly encouraged not to take an unconstrained approach that is inconsistent with exercising discretion in a fair and reasonable manner. In determining how to distribute discretionary bonuses, employers are encouraged to consider objective criteria, including individual performance, position within the company, and whether discretionary bonuses will or were awarded to similarly situated employees.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

This blog was co-authored by student-at-law, Abby Leung

[1] 2022 ONCA 614.

[2] 2022 ONCA 614 at para 9.

[3] Ibid at para 35.

[4] Ibid at para 41.

The end of the COVID-19 pandemic is in sight. Ontario has lifted many public health mandates and restrictions. Many Ontarians are resuming their pre-pandemic lives—including returning to work in-person.

Some have welcomed the transition from working-from-home to returning to the office, while others worry about the loss of the advantages of remote work. Remote work offers the possibility of a better work-life balance, flexibility for childcare, and the time and money saved on commuting. As such, many question whether employers have a right to demand continuing to work remotely, and whether employees may have a basis for refusal.

In most cases, employers do have the right to demand their employees return to the office, and employees, generally, do not have a right to refuse.[1]

However, this principle may not apply to all employment situations as there are a number of factors that must be considered to determine the rights and obligations of both parties to an employment agreement. These factors include the terms of the employment contract, human rights laws, and occupational and health regulations.

1. Employment contract

Specific attention should be paid to the express and implied terms of the employment contract.

Express terms are those are the clearly outlined in the agreement itself. Examples might include the wage amount, or the starting date of employment. Implied terms are not expressly stated in the agreement, but are implied by law. Thus, implied terms will largely depend on the province in which the employment takes place. An example might be where the employment contract does not provide for a termination notice period, in which case, the minimum standards as set out in employment standards legislation, would be implied into the contract.[2]

If the employment contract expressly and unconditionally permits the employee to work from home, then the employer would not have the legal basis to require this employee to return to into-person work, and the employee, in turn, would have a legitimate ground to refuse this demand.

2. Human Rights Laws

Human rights laws may also provide employees with a basis of refusal, but it must be on a prohibited ground of discrimination.[3] In Ontario, the Human Right Code lists the following grounds: race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability.[4]

Employers cannot force an employee to return to work, if it would be discriminatory to do so. For example, if an employee cannot return to in-person work due to a disability (which is a prohibited ground of discrimination), the employer has a duty to accommodate, and this accommodation may be allowing for continued remote employment.

3. Occupational Health and Safety Regulations

Employers have a statutory duty to safeguard the health and safety of their employees pursuant to the Occupational Health and Safety Act (OHSA).[5] By law, an employer must take every reasonable precaution to maintain a safe working environment.[6] These steps include following any remaining COVID-19 public health guidance in good faith.

Employees generally have a right to refuse work which they have a “reasonable basis” to believe is unsafe or a danger to their health.[7] This being said, the reasonableness of this belief is ultimately decided by a government inspector, who would be called to evaluate the working conditions should the employer and employee be unable to address and redress such concern before-hand, and on their own.[8] The standard of review for such decision is that of correctness, and based on the conditions at the time the work was refused.[9] The following situations are examples of unsafe working conditions granting a right to refuse work: driving a vehicle, which by certain characteristics, is not safe to operate;[10] or failure to provide roofing employees with anchoring technique/guard in case of fall.[11]

Courts have not tested whether simply attending a physical workplace during a pandemic qualifies as an unsafe working condition. Arguably, a workplace could be unsafe where the employer does not follow public health official guidelines, mandates, or restrictions. However, this alone may not necessarily be sufficient to refuse to attend the workplace. Every situation and workplace is different.

It is important for employers to carefully strategize through their return-to-work plans and ensure they are aware of each and every one of their various obligations. It is also important for employees to be aware of their rights to refuse unsafe work — despite the uncertainty as to what that could mean during a global pandemic.

4. Conclusion

Employers do have the right to demand their employees return to the office, and employees, generally, do not have a right to refuse. However, the employment contract, human rights legislation, and occupational health and safety regulations, each prove an added layer of complexity to that statement.

If an employment contract expressly and unconditionally permits the employee to work from home, then the employee would have a legitimate ground to refuse an employer demand to return to the workplace. Additionally, employers cannot force an employee to return to work, if it would be discriminatory and a violation of human rights to do so. Finally, employees have the right to refuse unsafe work — but there remains uncertainty as to what qualifies as an unsafe workplace during the pandemic.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”

[1] Geoff Nixon, “Why your options may be limited if your employer wants you back in the workplace”, CBC News, 4 July 2022, online: https://www.cbc.ca/news/business/canada-employers-wfh-office-return-1.6507545

[2] Employment Standards Act, 2000, S.O. 2000, c. 41, ss 57-58.

[3] Ontario, Human Rights Commission, COVID-19 and Ontario’s Human Rights Code – Questions and Answers, (News Report), 18 March 2020, online: https://www.ohrc.on.ca/en/news_centre/covid-19-and-ontario%E2%80%99s-human-rights-code-%E2%80%93-questions-and-answers

[4] RSO 1990, c H.19, s 2.

[5] RSO 1990, c O.1 [OHSA].

[6] Ibid, s 25(2)(h).

[7] Ibid, at s. 43(3).

[8] Government of Ontario, Part V: Right to refuse or to stop work where health and safety in danger retrieved from: https://www.ontario.ca/document/guide-occupational-health-and-safety-act/part-v-right-refuse-or-stop-work-where-health-and-safety-danger

[9] Fletcher v Canada (Treasury Board – Solicitor General Correction Service), 2002 FCA 424.

[10] Morey v CAT, 2022 ONSC 4621.

[11] Ontario Ministry of Labour) v Vixman Construction Ltd, 2019 ONCJ 955.