Keep Your Medical Benefits For a Short Term After Your Employment is Terminated If your employment is terminated, you are entitled to temporarily keep your group or employee benefits, such as medical or drug insurance plans. However, there are a number of important considerations to keep in mind. How long can I keep my benefits? The amount of time you will generally be allowed to keep your benefits is a range that depends on how long you were employed. It can be a simple calculation: if you worked for less than one year, you will be able to keep your benefits for one week. If you worked for eight years or more, your benefits will last for eight weeks. It is your employer’s responsibility to continue making payments on your behalf to ensure that you keep your benefits during this time period. This time period is called the “statutory notice period.” If you become sick or disabled during the statutory notice period (e.g., if you become ill with COVID-19), you remain entitled to your medical benefits. If your illness or disability extends beyond the period, your claim for benefits could possibly extend for as long as the medical issue persists. However, it will be very important for you to be able to prove when the medical issue started. If your medical issue arises beyond the statutory notice period, you may still be entitled to medical benefits under the “common law notice period.” However, unlike the statutory notice period, there is no simple calculator available to determine how long this period lasts. The Ontario High Court of Justice held that “there can be no catalogue laid down as to what is reasonable notice” (Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC)). The Ontario Court of Appeal declared that calculating this period “is an art, not a science” (Minott v. O’Shanter Development Company Ltd., 1999 CanLII 3686 (ON CA)). For this reason, it is very important for you to get legal advice to understand your legal rights before accepting a settlement offer. At a minimum, you may wish you consider having a complete medical examination. “What if I was terminated because I have COVID-19? Or, what if I was terminated because of any other medical condition?” If the decision to terminate you was influenced by a medical issue—or even a perceived medical issue—your human rights may have been violated and you are entitled to make a human rights complaint. However, human rights complaint processes and awards are complex. It will be very important for you to get legal advice to understand your legal rights. Seek Legal Advice For more information, assistance, or any other questions, please contact our employment lawyers today. Do not delay. This blog was co-authored by David Heppenstall, Student-at-Law. “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.” By Fauzan SiddiquiBlog, COVID-19, Employment LawSeptember 13, 2021January 8, 2024
Failure to Comply with Termination Provisions may be considered repudiating a valid employment agreement The case Perretta v. Rand A Technology Corporation, 2021 ONSC 2111, demonstrates that employers must abide by termination clauses as they run the risk of being found to have repudiated an otherwise valid employment agreement due to their conduct. Facts The plaintiff, Perretta, was terminated from her position without cause after working with the defendant for 5.5 years. The plaintiff’s employment contract provided that Rand A Technology Corporation (“Rand”) could terminate her employment without cause by providing two weeks of notice or pay in lieu of notice plus the minimum notice or pay in lieu of notice, benefits, and severance pay required by the Employment Standards Act (“ESA”). Instead of abiding by the clause, the plaintiff was advised by Rand that the additional two weeks owed beyond the ESA minimums would be withheld unless she signed a full and final release, a condition that was not included in the employment contract. After consulting with Perretta’s legal counsel, Rand apologized and transferred the equivalent of two weeks’ pay and the monetary value of her entitlements under the ESA. Nevertheless, the plaintiff brought a summary judgment motion arguing that Rand had effectively repudiated the employment contract due to Rand’s conduct. The Ontario Superior Court was asked to consider, among other issues, whether the employment contract between Perretta and Rand was repudiated by the defendant. Repudiation of Employment Contract The Ontario Superior Court agreed with the plaintiff and found that the defendant had effectively repudiated the employment contract. Repudiation of a contract, whether an employment contract or otherwise, occurs by the words or conduct of one party to a contract that shows an intention not to be bound by the contract. The Court cited Remedy Drug Store Co. v. Farham, 2015 ONCA 576, to outline the objective test for anticipatory repudiation. In particular, the court is to ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by the employment contract. In doing so, the court must consider the surrounding circumstances including the nature of the contract and the motives which prompted the breach. In this case, the Court determined that the defendant’s conduct constituted a repudiation of the employment contract. Rand did not specify in its employment termination letter that the plaintiff had to sign a Full and Final Release before receiving the two weeks’ salary required by the termination provision. The Full and Final Release’s use of extensive terms and organization demonstrated that the release was not a mistake on the part of the employer and demonstrated Rand’s intent to make these demands against the plaintiff. Lastly, the defendant heavily relied on its reversal of position only after receiving legal advice from the plaintiff’s counsel. Taking the acts and the surrounding circumstances together, the Court concluded that a reasonable person assessing Rand’s conduct would surmise that in demanding that its employee execute a Full and Final Release and comply with its terms, Rand no longer intended to be bound by the employment contract. Because the Court found that the employment contract was repudiated by Rand, it was not necessary to determine whether the termination provisions were unenforceable. However, the Court held that even if the employment contract was not repudiated, the termination clause would be unenforceable, as the just cause provisions contained several clauses that directly contradict the ESA. Conclusion The Ontario Superior Court’s decision demonstrates that employers must remain diligent to avoid the consequences of failing to abide by employment contracts. Failure to abide by employment contracts can jeopardize an employer’s ability to rely on termination provisions to limit entitlements. If an employer requires a release for entitlements beyond the ESA minimum notice, employers must clearly state it within their contract in order to prevent repudiation of the employment contract. Instead of paying 2 weeks’ notice on top of the ESA minimums, the employer was required to pay 6 months’ notice in total. The defendant could have avoided paying the increased notice had it simply complied with its own contract. This case serves as a warning to employers to ensure that they comply with their contractual obligations. Giving an apology will not be enough to cure the fatal mistake of failing to abide by a contract. It is important that when considering a termination of an employee, you have the right advice. If you have been terminated, prior to signing anything, you should contact a lawyer. Our team of employment lawyers are prepared to help you navigate through any legal questions you may have. “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.” By Fauzan SiddiquiBlog, Employment LawJuly 9, 2021January 10, 2024
Enforceability of Mandatory COVID-19 Vaccination Policies in the Workplace Register Now: Upcoming Event - HR/Employment Webinar - September 21, 2021 To date, Canada’s federal and provincial governments have not introduced any legislation which would require all eligible individuals to be vaccinated against COVID-19. However, would a mandatory vaccination policy introduced by an employer be legally enforceable? If employees refuse to get vaccinated, would an employer be justified to prohibit the employee from attending at the workplace, to place them on an unpaid leave of absence, or to terminate their employment or otherwise discipline the employee? In addressing this issue, there are two competing interests. Health and Safety Concerns of Employers On the one hand, an employer must take reasonable steps to maintain a safe working environment. This includes taking measures to protect its employees from contracting COVID-19. For example, employers must follow the current public health advice with respect to physical distancing, masking, and daily COVID-19 screening of employees. An employer may argue that since the evidence demonstrates that all approved COVID-19 vaccines in Canada are highly effective at reducing one’s chances of contracting the virus, and have a low risk of causing serious side effects, requiring all employees to be vaccinated is a reasonable step to prevent a COVID-19 outbreak in the workplace. Human Rights and Privacy Concerns of Employees On the other hand, the Ontario Human Rights Code prohibits employers from discriminating against employees based on several grounds, such as disability and religion, up to the point of undue hardship. For example, if an employee is unable to be vaccinated for medical reasons, the employer would have an obligation to provide a reasonable accommodation to the employee. Examples of such accommodations would include permitting the employee to work from home, or permitting the employee to attend at the employer’s premises, provided that they physically distance and/or wear a mask at all times. Further, some employees may not wish to disclose their vaccination status to the employer, on the basis that this information constitutes personal health information. An employee’s vaccination status does likely constitute personal health information under privacy legislation. However, requesting that an employee disclose their vaccination status in the interest of maintaining a safe and COVID-19 free workplace may be permissible, as long as the employer has a policy in place which sets out why the information is being collected, how the confidentiality of the information will be protected, who will have access to it, the purpose for which it will be used, where it will be stored, and the period of time for which it will be kept by the employer. Which will prevail? The courts have not yet addressed the issue of whether mandatory vaccination policies will be enforceable. It will likely depend on the type of workplace and the job duties of the employees in question. In an office setting, employers will likely be able to accommodate most employees who refuse to get vaccinated on the basis of a protected Human Rights Code ground. For example, employees may be permitted to work from home, to work in a relatively isolated area of the office, and/or be required to wear a mask. Where such accommodations would be reasonable, an employer would likely not be justified in terminating or otherwise disciplining an employee who refused to get vaccinated. However, a mandatory vaccination policy for health care workers at retirement homes or hospitals, who generally cannot work from home, is more likely to be enforceable. Many patients at hospitals and elderly residents would be considered “high risk” if they contracted COVID-19 and would be vulnerable to contracting the virus from an unvaccinated employee with whom they would be in regular contact. Physical distancing is likely not possible at all times and in many cases, wearing a mask would be insufficient protection for other employees, residents, and patients. In a situation where an employee makes a personal choice not to get vaccinated for a reason that would not be protected by the Human Rights Code (such as general vaccine hesitancy or belief in conspiracy theories), in certain workplaces the employer may be permitted to place the employee on an unpaid leave of absence until the pandemic has ended or even terminate the employee for failing to comply with the employer’s vaccination policy. As we continue to gain scientific knowledge about COVID-19 and its variants of concern, the effectiveness of the various COVID-19 vaccines, and their possible immediate and long-term side effects, the enforceability of mandatory vaccination policies is likely to change. On the one hand, if certain COVID-19 vaccines prove to be even more effective than previously thought of preventing serious and/or fatal cases of COVID-19, then mandatory vaccination policies will be more likely to be held enforceable. On the other hand, if the vaccines ultimately prove to be less effective than initially thought, and/or they can be linked to more severe side effects, mandatory vaccination policies will be more likely to be held unenforceable. The courts will eventually be required to determine where to draw the line between the health and safety concerns of employers and the human rights and privacy concerns of employees. Each case will be determined on its specific facts. If you have more questions about your employment law or human rights matter contact Marty Rabinovitch 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.” By Fauzan SiddiquiBlog, COVID-19, Employment LawJuly 6, 2021September 9, 2021
Principled-Articling Student Relationship Not Considered Unique Relationship Under Common Law Employment Principles – Wrongful Dismissal In 2016, Melissa Ojanen (“Ojanen”), an articling student at Acumen Law Corporation (“Acumen”), was terminated by her employer only four months after she began her articles. Acumen commenced a claim against Ojanen for theft, breach of contract, trespass for entering Acumen’s premises after hours without permission, and wrongful use of Acumen’s marketing materials after Acumen discovered a legal blog providing information for persons facing a driving prohibition similar to blogs maintained by Acumen. In response, Ojanen counterclaimed for wrongful dismissal, claiming that Acumen had no just cause to terminate her articles. British Columbia Supreme Court Decision The British Columbia Supreme Court dismissed Acumen’s claims against Ojanen and allowed Ojanen’s wrongful dismissal claim. The Court dismissed Acumen’s claims against Ojanen, finding that the claims were not supported by evidence. The Court also dismissed the allegation that Ojanen was attempting to compete against Acumen through the blog on the basis that Ojanen was not in a position to compete against the firm. Regarding Ojanen’s wrongful dismissal claim, the Court determined that Acumen’s allegations of misconduct, taken individually and together, did not constitute a valid cause of dismissal or for a unilateral termination of the articling agreement. The Court awarded Ojanen $18,934 in general damages and $50,000 in aggravated damages, finding that Acumen’s actions were unfair and undertaken in bad faith. British Columbia Court of Appeal Acumen appealed the lower court’s decision, arguing that it had failed to consider the context of the special relationship between a principal and an articled student mandated by the rules and requirements of the Law Society of British Columbia. Acumen argued that the trial judge had not properly considered the context of the employment relationship and therefore had arrived at incorrect conclusions about whether there was just cause to terminate the articling relationship. Ojanen argued that the judge had applied the correct contextual analysis and appealed the trial judge’s damages assessment, alleging that the trial judge had erred in failing to award her punitive damages. Principal-Articled Student Relationship The British Columbia Court of Appeal concluded that the principal-articled student relationship is not governed by any different or unique employment law or common law principles. Referring to McKinley v. BC Tel, the Court affirmed that common law employment principles related to just cause require a contextual approach, which includes consideration of all the circumstances, such as the nature of the employment relationship and the position of the employee. In taking this approach, the Court determined that the principal-articled student relationship consisted of an employment relationship governed by common law employment principles and an articling relationship governed by statutory authority exercised by the Law Society. A principal’s loss of trust in an articled student is not determinative of whether just cause exists to terminate the employment contract. As such, common law employment principles can be applied to the employment relationship between a principal and articled student. The Court of Appeal found that the trial judge correctly applied common law employment principles and found that Acumen did not have cause to dismiss Ojanen. Punitive Damages The Court of Appeal determined that the award of general damages should be increased by $100,000 and also awarded $25,000 in punitive damages. In considering an award for punitive damages, the Court referred to the factors listed in Whiten v. Pilot Insurance to determine whether, in light of Acumen’s conduct, the compensatory damages awarded to Ojanen were sufficient to accomplish the objectives of denunciation, deterrence, and retribution. The Court of Appeal determined that Acumen’s unwarranted accusations and allegations against Ojanen, as well as the decision to publicly serve Ojanen in front of her classmates, could be considered malicious or highly reprehensible conduct that markedly departs from ordinary standards of decent behaviour. The Court awarded punitive damages against Acumen and Ojanen’s articling principal jointly and severally. “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.” By Fauzan SiddiquiBlog, Employment LawJune 30, 2021July 8, 2021
Mediation in Employment Matters: Brief Overview Mediation is an opportunity for people in legal disputes to discuss their circumstances and try to reach a settlement. This is done in the presence of an independent and impartial, trained mediator. Mediation is an efficient option to reach a resolution of existing and threatened litigation because it is cheaper and quicker than going before a judge. For this reason, it is especially common in employment law matters. In Toronto (as well as Ottawa and Windsor), mediation is a mandatory process for most civil cases. The Mediator Usually, the parties will try to work with the opposing lawyers to find a mediator on which they mutually agree, and reaching this consensus is typically successful. Toronto has many experienced employment law mediators to choose from. However, if unsuccessful, the court has a “roster” of approved mediators from which one will be chosen and appointed for mediation. The Mediation The mediator cannot force a settlement or provide legal advice to either of the parties. Nonetheless, the mediation process has proven to be a successful tool in resolving employment law disputes, usually at relatively early stages of the case (when legal costs are low). It is important, and at times mandatory, to have all relevant documents exchanged between the parties before prior to the date of mediation. Such documents may include the following: documents detailing the plaintiff’s job search in the case of wrongful dismissal, the termination letter, supporting performance materials (if performance is a matter of dispute), and any other documents relevant to the issues in the case. Your mediator can help you decide which documents needs to be shared. Should the case be resolved during the mediation, then the parties must sign a minutes of settlement. Where settlement funds are required by the agreement, payment is usually made within the following 2-3 weeks. In addition, a ‘general release’ will also have to be signed (a document that states release from any and all known and unknown claims). Future wrongdoings are not covered by the general release form. Employee plaintiffs also often request a reference letter as a term of settlement, which if given, becomes a covenant of the agreement. The letter must be in accordance with the minutes and will not allow the common law defence of ‘fair comment’, i.e. the right to make an inaccurate comment about the employee’s performance even if that comment is an honest opinion. Confidentiality and Privilege The discussions during the mediation must not be repeated to anyone not directly involved in the matter – this is governed by the mediation agreement. A breach of this confidentiality (and thus a breach of the covenant) can lead to a number of additional legal disputes. ‘Settlement privilege’ is similar to confidentiality, and is often one of the most important terms to which the parties will agree. All settlement related discussions (if a settlement was reached) must also be kept private. The purpose of this rule is to allow the parties to make open and honest statements and requests to help reach a resolution promptly. Formal offers to settle are governed by Rule 49 of the Ontario Rules of Civil Procedure. Additionally, Rule 49 advances a certain benefit to incentivize parties to settle: a party who makes an offer to settle may (if technical procedures are followed) receive a cost award. Exceptions Settlement privilege, and privilege more generally, is not a guarantee and can be overlooked in exceptional circumstances. As mediation lawyers, we guide our clients through the mediation process and inform which statements and circumstances may be such exceptions. For example, threats, fraud, and misrepresentation – and anything else that may be against public policy – are typically not protected by privilege. If you need to book a consultation with a mediator, visit www.devrylaw.ca/mediation. “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.” By Fauzan SiddiquiBlog, Employment LawJune 24, 2021January 24, 2024
New Ontario Superior Court Decision holds that COVID-19 related Temporary Layoffs do not Amount to Constructive Dismissal at Common Law – Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 In earlier blog posts, which can be found here and here, we wrote about the implications of Regulation 228/20 (the “Regulation”), enacted pursuant to the Employment Standards Act, 2000(the “ESA”). The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave (“IDEL”). Section 7 of the Regulation states that a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 will not constitute constructive dismissal during the “COVID-19 period”, which was recently extended until September 25, 2021. The issue that remained unresolved was whether the Regulation also prevented an employee from advancing a claim for constructive dismissal at common law. As discussed in our previous blog about Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII) (“Coutinho”), the Court determined that the Regulation did not prevent the plaintiff, who had been temporarily laid off during the COVID-19 period and was on deemed IDEL under the ESA from pursuing a claim for constructive dismissal at common law. Under the common law, unless expressly stated in an employment contract, an employer does not have the right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. In accordance with Coutinho, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to damages. However, in Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”), the court came to the opposite conclusion. In this case, an employee was placed on temporary lay-off in March 2020 due to the closure of her workplace during the pandemic. The plaintiff commenced an action against the employer claiming damages for constructive dismissal at common law. The employer relied on Section 7 of the Regulation and argued that the employee was deemed to be on IDEL and that the temporary reduction of her duties and work hours did not constitute a constructive dismissal at common law. The Ontario Superior Court of Justice was asked to again consider whether an employee who had been temporarily laid off due to COVID-19 and was on deemed IDEL under the ESA had been constructively dismissed at common law. Constructive Dismissal at Common Law In contrast to the decision in Coutinho, the Court in Taylor determined that there was no constructive dismissal at common law. The Court held that it was clear that the Regulation was enacted to displace the common law with respect to constructive dismissal and layoffs, since all temporary layoffs relating to COVID-19 are deemed to be IDELs, retroactive to March 1, 2020 until the end of the COVID-19 period. As such, employees who were placed on IDEL were not constructively dismissed at common law. The Court disagreed with the analysis in Coutinho, stating that Coutinho failed to properly apply the principles of statutory interpretation. In particular, Coutinho had improperly interpreted Section 8(1) of the ESA to mean that the ESA may not displace the common law. The Court referred to the Court of Appeal’s reasoning in Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 (CanLII), in which the court expressly concluded that “Simply put, statutes enacted by the legislature displace the common law” and that it is incorrect to presume that the common law continues to operate independently of the ESA. Conclusion The decision in Taylor is in direct conflict with Coutinho and creates uncertainty as to whether employers would be liable at common law for constructive dismissal in relation to COVID-19. While Taylor provides relief for employers that have relied upon IDEL, the decision leaves the state of the law ambiguous for constructive dismissal claims at common law. It is very likely both of these decisions will be appealed and that the Court of Appeal for Ontario (the highest court in Ontario) will ultimately be asked to resolve this inconsistency in the law. “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.” By Fauzan SiddiquiBlog, COVID-19, Employment LawJune 15, 2021June 15, 2021
Temporary Layoffs during COVID-19 Can Amount to Constructive Dismissal under Common Law – Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII) In earlier blog posts, which can be found here and here, we wrote about the implications of Regulation 228/20 (the “Regulation”), enacted pursuant to the Employment Standards Act, 2000(the “ESA”). The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave. Section 7 of the Regulation states that a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 will not constitute constructive dismissal during the “COVID-19 period”, which currently lasts until July 3, 2021. The issue that remained unresolved was whether the Regulation also prevented an employee from advancing a claim for constructive dismissal at common law. In general, for the common law to be altered by statute, there would need to be express language in the statute to that effect. In Coutinho, an employee was placed on temporary lay-off in May 2020 due to the closure of her workplace during the pandemic. The plaintiff commenced an action against the employer claiming damages for constructive dismissal at common law, along with punitive and aggravated damages. Relying on section 7 of the Regulation, the employer argued that the plaintiff was deemed to be on Infectious Disease Emergency Leave and that the temporary reduction of her duties and work hours did not constitute a constructive dismissal at common law. The Ontario Superior Court was asked to consider whether a temporary reduction in hours of work and/or wages constitutes constructive dismissal at common law, despite the Regulation. Scope of Regulation 228/20 under the ESA The defendant argued that due to the unprecedented emergency caused by COVID-19, section 7 of the Regulation should be interpreted to apply not only to constructive dismissals for the purposes of the ESA but also at common law. The Court found that the scope of section 7 of the Regulation must be interpreted with section 8(1) of the ESA which provides that “no civil remedy of an employee against his or her employer is affected by this Act.” The Court determined that the scope of the Regulation was constrained by its enabling legislation and could not be interpreted in the same manner as a statutory provision. In support of this interpretation, the Court considered an online publication of the Ontario Ministry of Labour, Training, and Skills Development, which states that the Regulation affects only what constitutes a constructive dismissal under the ESA and does not address what constitutes a constructive dismissal at common law. Constructive Dismissal Under Common Law While the Regulation precluded the plaintiff from pursuing damages under the ESA, the Court determined that the Regulation did not prevent the plaintiff from pursuing a claim for constructive dismissal at common law. Under the common law, unless expressly stated in an employment contract, an employer does not have a right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. The Court found that the plaintiff was entitled to treat the company’s unilateral imposition of the layoff as a termination at common law and therefore the employee had the right to sue for constructive dismissal. This decision confirms that the Regulation to the ESA has no effect on an employee’s common law right to assert that a reduction in hours of work and/or wage constitutes a constructive dismissal, thus entitling them to wrongful dismissal damages. In light of the Court’s ruling, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to damages. “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.” By Fauzan SiddiquiBlog, Employment LawMay 26, 2021May 26, 2021
Challenging a Termination Clause in Small Claims Court A 2019 decision of the Ottawa Small Claims Court serves as a caution for employers and may encourage employees to fight wrongful dismissals. When an employee is terminated without cause, (s)he may be entitled to severance pay in lieu of notice of termination. The amount will depend on the length of time the employee has worked for the employer. If the sum of severance pay in dispute is equal to or less than $35,000, the dispute can be brought in Small Claims Courts. Small Claims Court proceedings are somewhat simpler and can lead to a quicker resolution of the matter. The parties in a Small Claims Court matter have no right to pre-trial examinations for discovery and hence proceed to trial relatively quickly (unless of course there is a raging pandemic). A further benefit of Small Claims Court actions is that the parties may represent themselves if they so wish, which will reduce litigation costs. Caution is advised, however, as the law around termination clauses is quite complex and can be confusing. Given this complexity, many termination clauses are drafted in a way that renders them unenforceable. That was the case in the above-mentioned decision. If an employer wishes to limit its exposure to wrongful dismissal damages, it is a good idea to consult an employment lawyer and to have the employment contract reviewed. An employment contract may eliminate a common law wrongful dismissal claim if (1) the agreement complies with the minimum standards of the Employment Standards Act (ESA) and (2) is clear and unambiguous and (3) ideally states that the severance pay offered is intended to extinguish all common law remedies. The Termination Clause In this case, the termination clause read as follows: Your employment may be terminated for cause at any time without notice or payment in lieu thereof. Your employment may be terminated for any other reason by the company upon delivery of one week’s notice per year of Espial service or payment in lieu thereof, or such other amount as is required under the Employment Standards Act, whichever is greater. The intention was to limit the employer’s right to claim severance pay under the common law and to grant him or her the entitlements under the ESA. This wording failed to have this effect, however. First, the clause did not provide for the continuation of benefits as is required under the ESA. This is a violation of the ESA, which sets out minimum entitlements for employees that cannot be contracted out of. A violation of the ESA renders the contract void. The second problem with the termination clause was its ambiguity. The clause could be interpreted to lack reference to severance pay, another entitlement under the ESA. If a termination clause is ambiguous, meaning that the employee upon signing the contract cannot know what his or her entitlement will be upon termination, the clause is void. Thirdly, an argument was advanced by the employee that the contract did not make it clear that the employer intended to oust the employee’s common law entitlements upon termination. The court found that there is no obligation to include a “warning sign” in the termination clause, but that the legal standard is whether the clause is sufficiently clear. Out of an abundance of caution, it may be advisable to explicitly state in the employment contract that the common law remedies are eliminated. The claim succeeded and $25,000 was awarded as damages. The plaintiff had been employed slightly less than three years. Conclusion Given the complexity of the law regarding termination clauses, it is advisable for employers to ask a lawyer to review their employment contracts regularly to ensure their enforceability. The law is evolving and even when a clause was enforceable at some point in time, new case law may have rendered it unenforceable. For employees who believe they have been wrongfully dismissed, the Small Claims Court may provide a good forum to obtain relatively quick relief. While they can represent themselves in front of Small Claims Courts, a lawyer’s advice can be indispensable in determining the prospects and the risk involved in the litigation. “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.” By Fauzan SiddiquiBlog, Employment LawMay 4, 2021March 27, 2024
Termination Provisions of Employee Stock Awards Agreement Found Unenforceable – Battiston v. Microsoft Canada Inc., 2020 ONSC 4286 (CanLII) In 2018, an employee was terminated by his employer without cause following a tenure of nearly 23 years. In addition to his base salary, the employee’s compensation included performance-based cash bonuses and stock awards, which collectively accounted for approximately 30% of his income. The stock awards in question were awarded to the employee during his employment but would not have vested until after his employment was terminated, during the reasonable notice period. When the employee was terminated, he was not paid his cash bonus for the 2018 fiscal year and his unvested stock awards were cancelled. The Stock Awards Agreement included the following clause: “in the event of termination of Awardee’s Continuous Status as Participant, Awardee’s rights under this Award Agreement in any unvested stock awards shall terminate. … Awardee’s Continuous Status as a Participant will be considered terminated as of the date Awardee no longer is actively providing services to the Company.” The Ontario Superior Court was asked to consider, among other things, whether the employee was entitled to receive his cash bonus for the 2018 fiscal year and throughout the reasonable notice period and whether the employee was entitled to his awarded but unvested stock awards. Stock Awards It was not disputed that stock awards formed an integral part of the employee’s compensation package. However, the issue before the court was whether the employee was entitled to the the stock awards that would have vested after the termination date, but during the reasonable notice period (of almost 24 months). The language contained in the Stock Awards Agreement stated that any unvested stock awards terminated immediately. However, the court ultimately determined that the termination language was unenforceable and awarded damages to the employee. In arriving at its conclusion, the court determined that the employer had not taken “reasonable measures” to draw the employee’s attention to the relevant termination language in the lengthy stock award agreement. The employee testified that he had not read the entire agreement and was not aware of the provisions which would have disentitled him to unvested stock awards in the event of termination. While the employee received email notifications with a link to the stock award agreement that he was required to accept in order to accept a stock award, the court decided that this was not a “reasonable measure” to bring the relevant language to the employee’s attention, in particular since the stock awards constituted an integral part of the employee’s compensation. Further, the court concluded that the termination language was “harsh and oppressive.” Specifically, “harsh and oppressive” terms must be drawn to the employee’s attention in order for them to be enforceable. As a result, the termination provisions were found to be unenforceable and the employee was entitled to damages in lieu of the awarded but unvested stock awards. Performance Bonus The court determined that it is settled law that performance-based awards, while discretionary, must nonetheless be conferred in a “fair and reasonable” manner. The employee argued that the process was unfair, but the court found that the employer’s decision was reasonable. Accordingly, the employee was not entitled to any damages as a result of being denied his performance bonus for the 2018 fiscal year. However, the employee was entitled to a payment in lieu of performance throughout the common law reasonable notice period. Implications for Employers Employers who wish to include (or introduce) termination clauses in employee stock award programs should ensure that reasonable measures (above and beyond email notifications) are taken to draw the language to the employees’ attention to increase the likelihood that these “harsh and oppressive” clauses will be enforceable. Finally, if a performance-based cash bonus program is available to employees, employers should ensure that the process is fair and the bonus decisions are reasonable. Further Reading Battiston v. Microsoft Canada Inc., 2020 ONSC 4286 (CanLII)What’s Hot on CanLII (Slaw: Canada’s online legal magazine) “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.” By Fauzan SiddiquiBlog, Employment LawFebruary 24, 2021February 24, 2021
Temporary Layoffs During COVID-19 – “COVID-19 period” extended until January 2, 2021 On May 29, 2020, Ontario passed Regulation 228/20 under the Employment Standards Act (“ESA”). As a result of this new regulation, non-unionized workers who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave, which is an unpaid, job-protected leave under the ESA. The regulation applies retroactively from March 1, 2020, and initially was set to expire on September 4, 2020, six (6) weeks after the state of emergency ended. This period of time is referred to in the Regulation as the “COVID-19 period”. Our initial blog, which explains the impact of the Regulation on employer and employee rights, can be found here. On September 3, 2020, the government of Ontario announced that the COVID-19 period would be extended until January 2, 2021. Impact of the Regulation and the Extension of the COVID-19 Period As a result of the Regulation and the government’s latest announcement, non-unionized employees who have been temporarily laid off between March 1, 2020, and January 2, 2021, for reasons related to COVID-19 would be deemed to be on Infectious Disease Emergency Leave. Under the ESA, an employee who has been laid off for more than 13 weeks in any period of 20 consecutive weeks (or for at least 35 weeks in any period of 52 weeks, if certain other conditions are met) will be deemed to have been dismissed from their employment. This constructive dismissal would then entitle the employee to statutory termination pay, as well as severance pay (if certain other criteria are met). The extension of the COVID-19 period to January 2, 2021, means that there will be no deemed terminations arising from temporary layoffs until after January 2, 2021, provided that the reason for the layoff was related to COVID-19. As noted by the government of Ontario, the Regulation can relieve employers from substantial payments to their employees, which can make a difference in times where the business is already struggling to survive the economic effects of the pandemic. Does the Regulation Alter the Common Law related to Temporary Layoffs and Constructive Dismissal? As set out above, an employer has a right to temporarily lay off employees under the ESA. However, it is well-established law that an employer does not have a common law right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. This would result in a constructive dismissal at common law. The common-law prohibition of temporary layoffs in Ontario can be altered if there is an express term in an employment contract that permits an employer to temporarily layoff employees in accordance with the ESA. In order for the common law to be altered by a statute, there would need to be express language in the statute to that effect, which is not the case here. In fact, the ESA expressly states that “no civil remedy of an employee against his or her employer is affected by this Act” and the Regulation does not contain any language which would modify this section of the ESA. In the event that the common law provides a greater right or benefit to an employee than their ESA entitlements, the common law will prevail. However, an employer can limit an employee’s entitlements by contract, as long as the contract ensures that the employee will not receive less than their minimum ESA entitlements. COVID-19 has resulted in unique and unprecedented circumstances for both employers and employees and how the courts will interpret and apply Regulation 228/20 (and the most recent amendment to the COVID-19 period) remains to be seen. The courts may still find that employees have been constructively dismissed at common law, but may award less generous severance package to employees. The specific facts which resulted in the temporary layoff or reduction in hours or wages will also be relevant. If the common law remains unaltered, many temporary layoffs due to COVID-19 would be unlawful and may result in the employee’s entitlement to a common law notice period and significant severance payouts for employers. Key Takeaway for Employees: Employees who have been temporarily laid off during the COVID-19 period and were waiting until after September 4, 2020, to claim statutory termination pay and severance pay from their employer arising from a deemed termination of their employment will now have to wait until after January 2, 2021. However, assuming that there was no lay-off provision in their employment contract, employees in this situation should consider taking the position that the lay-off was in contravention of the common law, their employment was constructively dismissed, and that they are therefore entitled to a common law notice period. Key Takeaway for Employers: Employers will not be obligated to pay out hefty sums for severance pay and termination pay under the ESA until after January 2, 2021, with respect to employees who have been temporarily laid off due to COVID-19, and may therefore wish to consider extending temporary layoffs until January 2, 2021. However, the Regulation does not bar employees from pursuing an action in common law and it is unclear at this stage how courts will interpret and apply this Regulation. If you have more questions about how this new Regulation will affect you as either an employer or employee, contact employment lawyer Marty Rabinovitch at 416-446-5826 or at marty.rabinovitch@devrylaw.ca to discuss your rights and options. “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.” By Fauzan SiddiquiBlog, COVID-19, Employment LawSeptember 15, 2020September 29, 2020