Announcing My New Practice

I am proud to announce that I have now opened my own practice, in assocation with the lawyers of Swanick & Associates, in Don Mills.  For any employees or employers in Toronto or York Region (or further afield but willing to make the commute) who require or might require a lawyer's assistance, I encourage you to contact me for detailed information on services and pricing.  (See the disclaimer at the bottom of this post before emailing.)

Services include (but aren't limited to)...

For employers:

• Wrongful dismissal defence
• Dismissal consultations
• Defending proceedings before the Human Rights Tribunal, the Ontario Labour Relations Board, and others
• Labour Arbitrations
• Policy development and consultations (including Bill 168 compliance, for those employers who still haven't caught up)
• Drafting of employment contracts
• Collective agreement consultations

I am a firm believer in the "a stitch in time saves nine" approach to labour and employment law - with good proactive advice up front, you can often limit your liabilities and significantly reduce legal expenses.  Good written employment contracts and policies, implemented correctly, can add a lot of value.

For non-unionized employees:

• Wrongful dismissal consultations and litigation
• Constructive dismissal consultations
• Proceedings before the Human Rights Tribunal, the Ontario Labour Relations Board, and others

If you've been fired or mistreated by your employer, it often feels like a betrayal, and can be so stressful and demoralizing that it's hard to face the situation.  I can help you understand your rights and - if necessary - pursue them.  Where money is stretched thin, as it often is in these situations, I may be prepared to discuss alternative billing arrangements.

*****

This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

While this post advertises legal services, I make no guarantees that I will be able to take on your file.  Until and unless I agree to be retained,  I am not your lawyer.  Please do not send confidential information in an initial email to me.  Further, if you do not receive a response to an email in a timely fashion, assume that I have not received said email.

Third Party Insurers can (sometimes) rely on Post-Employment Releases

An employee always has to be careful when signing a full and final release, for a few reasons.  The recent decision in Zelsman v. Meridian Credit Union is an excellent example of this.

Ms. Zelsman's employment was terminated, following which she applied for long-term disability benefits to the LTD insurer, Great West Life.  This application was denied.  Ms. Zelsman proceeded to litigate the termination of her employment via the Human Rights Tribunal, resulting in a settlement achieved at the mediation, involving a payment to Ms. Zelsman of $90,000, which appears largely to be compensation for the loss of her LTD insurance due to the denial of the LTD benefits.

Then, retaining a different lawyer, Ms. Zelsman appealed the denial of her LTD benefits, and was eventually successful...however, after granting her LTD application, resulting in a hefty lump sum of retroactive benefits in excess of $46,000, Great West Life found out about the full and final release, and - moreover - found out that it contained a term releasing Great West Life from any such liabilities, and reversed the payment.

Normally, if you're not a party to a contract, you don't get to benefit from it.  In this context, however, because the release so expressly released Great West Life, the Court was prepared to conclude that Great West Life could rely on it; in other words, the LTD benefits were toast.

So how does this happen?  The biggest question is this:  How did Ms. Zelsman get to the point of litigating against Great West Life after signing such an express release?  Indeed, after getting the LTD benefits, Ms. Zelsman would have been happy to resile from the minutes of settlement, but that's not usually possible to do - particularly without $90,000 cash in hand to refund the employer.

Every management-side lawyer appears to have a different way of dealing with Minutes of Settlement and Full and Final Releases, but the one consistent fact is that they are all quite comprehensive, releasing anything and everything.  In fact, usually the releases go well beyond the subject-matter of the current dispute, which adds real value to them for employers, but the consequence is that employee-side counsel have to be careful to ensure that their clients understand that they can't proceed with other claims afterward.

Indeed, given the extremely final nature of these Full and Final Releases, I've occasionally had to go back to employer counsel to get exemptions inserted for such things as pensions - so we're dealing with pay in lieu of notice, but the employee still has a tidy sum tied up in an employer pension plan to be dealt with (which usually isn't in dispute, so my client doesn't need to pay me to help deal with it).  The response I usually get is "Well, of course the intention isn't to waive these entitlements", whereupon I respond, "Then you won't mind expressly saying so."

Simply, these releases envision a completely cut cord, saying "We're done dealing with you, and we won't deal with you again."  If there is an unforeseen dispute down the road, I don't want these releases getting in the way.  But that isn't always the case.  So the releases have to be tailored.

Most of the time, it's a matter of saying to the client, "If you sign this, you don't get to come back and sue for more, you don't get to make a Human Rights Application, you don't get to make a claim for any more wages due, etc."  Every so often, this shocks the client, because they thought they'd hired a lawyer just to deal with one isolated aspect of their relationship with their employer, and thought very cleverly that they'd get money now then come back for more money later on a different aspect.

In this case, the first lawyer assisting with Ms. Zelsman knew that there had been an unsuccessful application for LTD benefits, and presumably opined that it was better to go after the employer for it than to take on the insurance company.  The second lawyer didn't realize that a settlement had been reached, and agreed to take on the insurance company.  (They both were pretty successful in their respective tasks, it seems, but it was really one or the other.)

This is the other thing that can happen when you change counsel too many times:  Facts get lost.  It takes time, effort, and often money for your new lawyer to achieve the same level of familiarity with the file that your previous lawyer had.

Was Ms. Zelsman not told that the Minutes of Settlement would prevent her from going after Great West Life?  Perhaps she was told, but didn't fully appreciate it?  Or did at the time, but forgot?  Or thought that she'd pull a fast one and try to proceed with her claim anyways (she very nearly pulled it off, after all)?  As outside observers, we can't know.  What seems almost certain is that, had she gone back to her first lawyer afterwards and said, "Now I want to go after the insurer", the first lawyer would have said, "Sorry, with the release you signed, you really can't."  (Maybe this happened, and the client didn't listen.  Who knows.)  But retaining a second lawyer means increased legal fees of her own appealing the denial, increased legal fees (with a third lawyer) in making the Court Application, plus there's now a good chance that she'll end up having to pay several thousand dollars toward the insurer's legal fees.

The lesson to clients is:  Tell your lawyer everything, and make sure you listen to what they say.  The lesson to lawyers is not to take anything for granted.  Maybe you think that the client has accepted your advice not to go after the insurer, but you never know if in the back of their own minds they're thinking that they'll be clever and try for both.

*****

This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Withholding Unearned Vacation from an Employee's Final Pay

This topic recently came up in a discussion group I'm part of on LinkedIn, and I thought it deserved some attention on this blog.  Essentially, the question is this:  If your employee takes unearned paid vacation then quits before earning it, can you withhold the pay from his final pay cheque?

The answer is, in true lawyer's form, a firm "Maybe".

It happens often enough, sometimes because an employer just wants to be generous, but more often where employees are permitted to take vacation in the year in which it is earned.  Suppose I earn three weeks of vacation per calendar year, and am expected to take it in the year earned:  Unless my last week of the calendar year is a vacation week (which would unduly restrict the scheduling freedom of both the employee and employer), it's inevitable that some of my vacation will be pre-taken.

So supposing I took all three weeks of vacation in the first part of the year, and quit at the end of August...I've received three weeks of vacation pay, but only earned two weeks, so I've gotten a week's pay out of my employer that I'm not entitled to.  Of course, my last pay will usually contain a week or two (or more) worth of wages, so my employer can just take what I'm owed out of that, right?

Usually, the Ontario Labour Relations Board is really finicky about employers withholding sums owing out of money owed.  There are certain circumstances in which it is permitted.  But outside of those specific circumstances, it is not.  So there have been cases in which the employer has suspected an employee of theft, fraud, or damaging employer property, and fired the employee, withholding any wages due as partial compensation for the damages the employer has suffered.  The employee goes to the Ministry of Labour, and the Ministry then tells the employer something to the effect of, "As far as payment for wages earned goes, we don't care if he walked away with a full cash register; you still have to pay him the money.  If you want to sue him separately, that's your own business."  And the OLRB will come to the same conclusion.

Withholding an overpayment of vacation pay is different, however, because vacation pay is *also* a form of wages.  In essence, cutting my vacation overpayment from my last pay is like saying, "Oh, we've already paid you that portion of your last pay."  And the OLRB will frequently accept that.

But not always.  There's a line of cases in which the employer never suggested that overpayments of vacation pay would be recovered until after the employee made a complaint to the Ministry regarding other unpaid amounts - essentially making an ex post facto assertion that their obligations were satisfied or offset by those vacation overpayments.  The OLRB rejected the employer's asserted entitlement to withhold the overpayment in these cases, and there's a certain logic to it.  When the relationship was working well, the employer was perfectly happy to let the employee take a couple of extra vacation days in a year without feeling the need to conduct a reconciliation of it.  It's the same underlying logic as a discretionary bonus - you give the employee more than they're entitled to because you're happy with the job they're doing, and you want them to be happy to stay in the job.  Then, down the road, the relationship breaks down, and the employer goes back and says, "Oh, you remember all those perks I gave you?  I want you to compensate me for them now."  It seems wrong.

There's an easy way around this, however.  Keep track of vacation entitlements on a regular basis.  Maintain a good vacation policy that asserts that overpayments must be reconciled, and will be deducted from the employee's final pay if the employee leaves before earning the vacation taken, and have the employee agree to that policy.  When an employee requests vacation time that isn't already earned, make sure that, if you approve the request, the approval contains a reminder of the policy, that if they leave before earning the vacation pay they'll be responsible for the overpayment and it will be deducted from their wages.

I've heard HR and bookkeeping professionals say that this sort of policy is *necessary* to recover an overpayment - i.e. it's inappropriate to withhold an overpayment unless you have such a written policy in place or told the employee in writing that it would be the consequence.  That's not strictly true.  It probably arises from the Carlisle case, in which the employee was entitled not to have a deduction for vacation pay that she overtook *right before her effective resignation*, and the OLRB justified the "harsh" result by pointing out that the employer could have avoided the situation through proper use of a policy.  (Or by refusing the vacation she had requested after putting in her two weeks notice.)

However, I would opine that the current state of the law is set out more concisely by Brown Bear Day Care case, in which there was an 'understanding' of pre-taking vacation, once discussed in a staff meeting but never reduced to writing.  The Board summarized the existing case law on the point and came to the following conclusion:

The circumstances before me most closely resemble the situation in MenuPalace.  On the evidence before me, Hollander (and all other employees) were made aware well before Hollander’s employment ended that there would be an annual reconciliation of vacation days taken and vacation days earned.  It cannot be said that she was lulled into thinking that the overpayment would not be recovered, which is a consideration that seems to have affected the decisions in Modern Niagara and Hillis, and which also finds currency in the comment in MenuPalace that the reconciliation of the overpayment must occur “within a reasonable time”.   I find that the Employer here was permitted recover the overpayment it had made to Hollander, and did not require her written authorization to do so.  On the basis of the same reasoning, it was also permitted to recover the overpayment it had made to Hollander in respect of paid sick leave, and did not require her authorization to do so.

*****


This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

When will the HRTO refuse to defer an Application?

"The Tribunal will generally defer an application where there is an ongoing grievance under a collective agreement based on the same facts and issues."

That sentence has been part of literally hundreds of decisions from the Human Rights Tribunal of Ontario.  Because the Supreme Court (in the Parry Sound decision) found in 2003 that labour arbitrators have parallel jurisdiction to interpret and apply human rights legislation, it is common practice for any bargaining unit member feeling that their human rights have been violated to both grieve the issue and make an application to the HRTO.  This is legitimate.  However, because the HRTO doesn't want to proceed with parallel proceedings, it takes the position that, if there's a grievance moving forward, it will let the grievance go first.

There's a certain logic to this.  Firstly, grievances often include matters above and beyond human rights-based allegations, which the HRTO can't deal with.  So if only one proceeding needs to proceed, it will usually be the grievance.  Secondly, the HRTO is well-positioned to evaluate after the completion of the grievance process whether or not there are outstanding human rights issues that need to be dealt with.  Thirdly, labour arbitrators are privately paid by the parties (i.e. the union and the employer), whereas the HRTO is government-funded with limited resources, so to the extent that it can defer part of its caseload to others, it will.

To applicants, however, there are certain advantages to the HRTO.  Yes, they have the union to assist them in the grievance process, but there are also free legal services available to applicants to the HRTO.  Ultimately, the big difference is that the individual applicant drives an HRTO proceeding, whereas it's the union (taking into account the needs of the grievor but also the rest of the bargaining unit) driving grievance proceedings.

So for a grievor who has grown disillusioned with his or her union representation (which happens fairly frequently), it's a bit of a kick in the face that they are forced to proceed with the grievance before they can move forward with the HRTO application.  And as an added bonus, if the union and the employer reach a settlement of the grievance - even over the objections of the grievor - there is a good chance that the HRTO will conclude that the subject matter of the proceeding has been "appropriately dealt with", and not proceed with the application.  (See Rysinski v. Aecon Industrial.)

It is in this context that I find the recent HRTO decision in Dalrymple v. 412506 Ontario Ltd. interesting.  Ms. Dalrymple worked for St. Jacques Nursing Home, and her claims are apparently as follows:  On June 30th, 2009, she suffered an injury in the workplace, and provided a doctor's note substantiating her absence from work to August 10th, at which point there was a follow-up appointment scheduled.  Due to a family emergency, she was unable to attend that appointment, but ended up getting back to the doctor 3 days later for a note addressing the relevant period.  In the mean time, the employer immediately jumped on her temporarily-unsubstantiated absence and terminated her employment.  After she began a Labour Market Re-entry program under the WSIA, the employer suddenly contacted her (no doubt finally having received better legal advice) to offer her accommodated work, which compromised her position in the Labour Market Re-entry program.


Ms. Dalrymple initiated a grievance in September 2009.  There is no word as to what happened to the grievance since then, except that the union has indicated that it has now decided to refer the grievance to arbitration and the employer has agreed to waive the timeframes for referral of the grievance.  The HRTO decision notes that Ms. Dalrymple "asserts that the union has not represented her very well."  In June 2010, she commenced the HRTO application.

Now, with the grievance potentially moving to arbitration (as well as some related issues that may be going to WSIAT), the employer has asked to defer the HRTO Application.  And those who may have thought that deferral is automatic...have been proven wrong.

[15]           I do not find it appropriate to defer this Application because of the outstanding grievance.  The grievance was filed almost two years ago and the union has recently advised that it has decided to refer the grievance to arbitration.  As of the date of this Interim Decision, the Tribunal has not been advised of any date set for arbitration and has not been provided with documentation showing that the grievance has in fact been referred to arbitration.

[16]           The referral to arbitration is also well after the Tribunal’s process was initiated.  The parties have filed substantive pleadings and a mediation has been held.  At this stage of the Tribunal’s proceedings I do not find it appropriate to defer the Application because of the outstanding grievance.

*****

This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Back to Basics: Is this contract enforceable?

Having yesterday posted about why you should use an employment contract, it's worth noting that there are a lot of ways to go wrong when drafting or executing an employment contract.  In addition to making sure that the terms of restrictive covenants are enforceable, there are issues that can invalidate termination clauses or even entire written contracts.  This is not an exhaustive treatment of the subject, but just some of the red flags.

(1)  Lack of Consideration

In law, a contract requires "consideration" - something of value flowing from each party in exchange for the promises of the other.  Now, you might think that, in an employment relationship, consideration is easy.  The employee gives the employer his labour; the employer reciprocates by giving the employee a paying job.

Not so much.

Oh yes, in theory, that's fine.  The challenge arises, however, when the employee already has the job, whether they've just recently created an oral contract or the employee has been there for 20+ years.  Because when the employer puts a contract to an existing employee, unless there is "fresh consideration" in the contract - something they're getting now that they weren't getting before - even the signed contract is, in law, just a meaningless piece of paper for lack of consideration.

It's quite common for a written contract to be put to an employee after they've already started in the job, and accordingly to be of no force and effect.  However, the difficulties are more onerous than that: even having the employee sign on day 1 or earlier doesn't necessarily get you around the consideration problem.  An agreement that is capable of forming a contract (i.e. with consideration and sufficient certainty as to its terms) is formed simply by offer and acceptance.  So there are cases, such as Alishah v. 1582557 Ontario Ltd., in which the employer offered a position, the employee accepted it, and the contract that was subsequently, though still before the start date, put to the employee and was signed was unenforceable.  (In that case, Alishah had quit his previous job after getting the job offer but before getting the contract.  That kind of reliance isn't strictly necessary, but is strong evidence of the existence of a contract.)

What about the employer argument that "Well, I didn't fire the person, as I would have had he refused to sign the contract."  Isn't that consideration?  The Ontario Court of Appeal has wrestled with this question a few times.  In the 2001 Techform decision, the Court found that, where the employer has at least tacitly promised to forbear from exercising its right to terminate the employee for a reasonable period of time, that constitutes consideration.  However, in the subsequent Hobbs v. TDI Canada Ltd. and Braiden v. La-Z-Boy Canada Limited cases, the Court construed that decision very narrowly.  It isn't enough that, in hindsight, the employer didn't fire the employee for a time after the signing of the contract, but rather it is necessary that the employer make a promise in advance not to fire for a reasonable period of time.

So what should an employer do?  With new hires, never communicate an offer without making it clear that the offer is subject to them accepting the terms of the written contract.  The best way is to make sure that the offer is in writing, with the contractual terms appended.  It's okay to call and say "We're sending you an offer with a written contract."  It is not okay to call and say "The job's yours if you want it" and then to unexpectedly send them the contract afterward.

With existing employees, give them something.  It doesn't have to be much - a small raise, a token signing bonus, even a peppercorn would do.  That said, it is theoretically possible that, with nominal consideration depriving the employee of substantial rights, there may be an argument to be made that the contract is 'unconscionable'.

(2)  Statutory Non-Compliance

If the termination clause does not adhere to the minimums under the Employment Standards Act, 2000 (again, speaking of Provincially-regulated businesses in Ontario), it is void.  If it's going to be a fixed amount of notice that doesn't change over time, it has to match or exceed the highest statutory minimum that might arise (i.e. 8 weeks).  If there's a formula, it has to match or exceed the statutory minimum in every instance.

Indeed, I think it's best to key the language to the statute directly, but even then you have to be careful:  In the British Columbia case of Waddell v. CINTAS Corporation, the employee had started employment in Ontario and his contract tied his entitlements to the Ontario ESA...then he transferred to B.C., where he worked until the termination of his employment.  The B.C. minimum entitlements are defined slightly differently from Ontario's and in some instances may be greater.  Thus, keying the entitlements of a now-B.C. employee to Ontario's statutory minimums had the result that the provision was void.

Conversely, in another B.C. case, Boule v. Ericatel Ltd., language keying the entitlement to "the applicable provincial law" was found too vague to be enforceable.  These are tricky, which is why it's very prudent to hire a lawyer with employment law expertise to draft your employment contracts.

(3)  The "Substratum" Argument

This is a less common issue (and becoming less so), but far easier to deal with.  Picture this classic scenario, where a person who started off in the mail room rose through the ranks to eventually become an executive.  Now imagine that, when starting in the mail room, he signed a contract with minimalistic entitlements.  The substratum argument is that the character of the employment has changed so much over the course of the relationship that the parties can no longer be held to the original contract; the parties could not have reasonably expected when signing the contract for a mail room assistant that it would apply to an executive.

But, as I said, it's easy to deal with:  Every time a person gets promoted, they should sign a new contract.  It should be made into a practice.  Of course, keep in mind the tips above about fresh consideration, but it shouldn't be too difficult since the promotion (and raise that would usually accompany it) would constitute fresh consideration.

*****

This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Back to Basics: Why should we use an employment contract?

Most sophisticated employers use (or should use) written contracts for their employees.  The advantages are myriad, in terms of setting out expectations for how the employment relationship should move forward, including remuneration, yet the most significant advantages arise upon termination of the employment relationship.

Termination by the Employee

This is a minor point, but not unimportant.  Many employees wrongly think that 2 weeks notice of resignation is just a courtesy.  Only in certain narrow circumstances is it statutorily required in Ontario, but under common law an employee must give "reasonable notice" of resignation.  That's contextually based, and not the subject of much case law, but it's safe to say that 2 weeks isn't always the magic number.  (If you have a great deal of responsibility, and you expect the employer to need time to assign your duties elsewhere, you might consider giving more notice.)

So the advantages of having a clause addressing this in the contract are two-fold:  Firstly, it tells the employee in no uncertain terms that they are, in fact, required to give notice, rebutting the myth that they can leave at will if they want to.  Secondly, it determines how much notice is required.  If the employer thinks that 4 weeks is necessary to make the transition, 4 weeks notice can be required.  Or longer, in the right case.  Employees seldom feel very empowered to negotiate the terms of an employment contract, and even less so as regards termination clauses.  (See this earlier entry regarding negotiating termination clauses.)

That being said, insisting on too much notice may send the wrong message to the employee.  I have seen contracts requiring employees to give three months of notice, but in one of those contexts (being a contract that was being put to me personally by a prospective employer) it was coupled with other red flags that told me that the firm was having difficulties with employee retention, which factored significantly into me not accepting the offer.

Termination by the Employer

This is, by a large margin, the most common issue to arise from employment contracts.  As I discussed in detail in this recent entry, when terminating an employment relationship without just cause, an employer is likewise obligated to give notice or pay in lieu thereof.  There's the statutory minimum, which creates a floor for most employees, yet the implied term requiring an employer to give "reasonable notice" usually makes for much more significant liabilities.

So, once again, there are two advantages to the termination clause:  It can be used to reduce liabilities to as low as the statutory minimum, and it also provides some degree of certainty.  Calculating "reasonable notice" is not an exact science, and an employer shouldn't be surprised if the employee's lawyer is demanding a significantly higher amount of money than the employer's own lawyer opines they should need to pay.  Just negotiating a settlement is going to drive up legal fees, and it gets even more expensive if it has to go to litigation.

As well, there are related advantages in terms of limiting the employer's responsibilities.  When setting out the terms of the remuneration package in the written contract, Courts have held in some circumstances that terms requiring 'active employment' as of certain dates for bonus eligibility can be enforceable.

Post-Employment Obligations

A written contract at the outset of employment is really the best time to set out any restrictive covenants.  If you're going to require non-solicitation or non-competition clauses, that's the place for them.  Of course, there are certain requirements for restrictive covenants to be enforceable (which I previously discussed here).

Tomorrow, how to make a written employment contract binding.

*****

This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Back to Basics: I've been fired for no reason! How can they do that?

Occasionally in this blog, I start talking about things like reasonable notice in fairly cursory ways.  And judging from the search terms people use to find this blog, I'm fairly confident that many of my readers don't need any further elaboration of the concept.

However, it's also clear that some of my readers are not experienced in employment law, and are looking for information about the legal framework surrounding dismissal.  So let's back up for a moment and talk about what a dismissed employee, without just cause, is entitled to.

As a beginning qualification, let's be clear that I'm talking here about the non-union context.  In union contexts, not-for-cause terminations are usually limited to layoffs, and have a different framework.

Practicing employment law, it is not at all uncommon to get a call from a prospective client who says, outraged, "They fired me without any reason at all!  They even said they didn't have a reason!  How can they do that?"

People like to think that they have job security, that they can't get fired unless they do something wrong.  That's not true at all; without just cause, an employee can be fired on notice (or pay in lieu thereof).  I would say that upwards of 85% of the terminated employees I have seen were terminated on a not-for-cause basis.  (It's also true that the *vast* majority of not-for-cause terminations involve some employer dissatisfaction with the employee - poor productivity, poor chemistry with co-workers or managers, misconduct that the employer isn't confident rises to the level of "just cause"...it is exceedingly rare to have a purely economic decision for a layoff.  But that doesn't really matter to the analysis.)

Employment as Contract

Even when there isn't a formal written contract, the provision of service in exchange for wages is still contractual in nature.  Let's suppose I hire you to work for me, and all I tell you is the job title, a brief summary of the job duties, your wages, your hours, and where you have to go to report for work in the morning.

That's all the important stuff, right?  That's enough for you to accept the job, show up for work, and start doing the job.  But what about other matters?  The tools that will be made available to you to do your job?  The extent of contact you're going to have with clients, or the extent to which you will be supervised in your duties?  What about vacation time?  Overtime?  Breaks?  And, importantly for our purposes, how does either party terminate the contract?

These things are defined by a couple of different sources.  So let's start with the most authoritative source, the Employment Standards Act, 2000.  This is the Provincial statute that applies to employment relationships within the jurisdiction of the Province - some employers are Federally regulated, and they fall under a different statute (the Canada Labour Code), but the principles are largely similar.

The Employment Standards Act, 2000

The ESA sets minimum entitlements for employees.  There are provisions in the ESA that state that any contractual provision giving more than the minimum to the employee is enforceable, but any contractual provision giving less to the employee than the minimum is void.  The easy example to understand is "minimum wage".  If I offer to pay you $8/hour, yet the minimum wage under the circumstances is $10.25/hour, then you could take the job, then insist on $10.25 even notwithstanding that you agreed to $8.

So the ESA sets minimums for paid vacation, unpaid lunches, overtime pay.  It also creates entitlements for employees in the sense of creating maximum numbers of hours that can be worked over a period of time.  And it sets a minimum standard for notice of termination and severance pay, based on a formula taking into account length of service and, in some cases, the size of the employer's Ontario operations.  (See below.)  Note that the Regulations under the ESA create a number of exemptions to these entitlements.

The Common Law

Where the government hasn't enacted a law speaking to a point (i.e. in the ESA), and where the parties haven't reached a binding contract in respect of the point, the point is governed by the common law.  Over centuries, judges have looked at fact-patterns and decided the most just resolution.  These cases become precedents, and subsequent cases are likely to be determined similarly.

So the Courts have looked at a lot of employment relationships, and they have read in certain "implied" terms, and in particular an implied term that neither party will terminate the employment relationship without giving the other party "reasonable notice".  (While the employee is, strictly speaking, required to give reasonable notice, it's relatively rare that there is any litigation flowing from this, and what's "reasonable" for the employee to have to give is very different from the "reasonable" notice required of the employer.  So from here on in, when I discuss "reasonable notice", it's the notice required of the employer.

Let's be clear that the common law can be displaced by a binding contract.  So if there's an enforceable termination clause in the contract (see my discussion of the ESA above...there are other pitfalls to enforceability as well), then that will have replaced the "implied" term with an express term, and there will be no entitlement to "reasonable notice" as defined by common law.

Reasonable notice of termination is defined with reference to several factors.  The usual four (though they are not an exhaustive list) are age, length of service, character of employment, and availability of replacement employment.  So a young person who has spent a few months in a front-line service position has fairly minimal entitlements, whereas an older person who was fired from a CEO position held for many years will likely have significant entitlements.  Either way, common law reasonable notice entitlements are usually measured in months (seldom exceeding 2 years).

One more important point is that common law notice entitlements are subject to an obligation to "mitigate".  Suppose an employee is terminated without cause and without notice, and has a reasonable notice period of 12 months.  During the notional notice period, the employee is obligated to try to find equivalent replacement employment.  (Failing to take reasonable efforts can result in a loss of entitlements.)  Now suppose that the employee obtains a new position at 90% the pay rate after 4 months.  He is entitled only to be 'topped up' to what he would have received over the whole notice period.  (So the first four months pay in full, and then over the remaining 8 months he gets only the 10% extra that he would have gotten in his old job.)

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer

*****

Ontario's Employment Standards Act, 2000:  Minimum entitlements on termination for most employees

The first entitlement (again, provided no exemption applies) is notice of termination.  This minimum entitlement can be satisfied by either actual notice or pay in lieu thereof - they can tell you, "Your employment is terminated effective x weeks from now", or they can say "Your employment is terminated effective immediately, but we will continue paying you for x weeks."

This is entirely based on length of service:

Nil to 3 months of service:  No minimum entitlement.
3 months of service to 1 year of service:  1 week notice
1 year to 3 years of service:  2 weeks notice
3 years to 4 years of service:  3 weeks notice
4 years to 5 years of service:  4 weeks notice
5 years to 6 years of service:  5 weeks notice
6 years to 7 years of service:  6 weeks notice
7 years to 8 years of service:  7 weeks notice
8 years of service and up:  8 weeks notice.

(For simplicity, I've abbreviated the language.  In truth, 2 weeks notice is what you get if you have 1 year of service but less than 3 years of service, meaning that if you're fired without cause on your 3rd anniversary, you get three weeks notice.)

The second entitlement, in some cases, is to severance pay.  This cannot be satisfied by notice, but must be provided by way of pay, though it too is measured in terms of number of weeks, meaning that entitled employees must be paid the equivalent of x weeks pay, in addition to their notice entitlements.

Eligibility for severance entitlement, again subject to various exemptions in the regulations, requires two criteria be met:

(1)  The employee must have five years of service or more, and
(2)  The employer's Ontario payroll must be in excess of $2.5 million, OR the severance is part of a mass layoff where the employer is terminating all or part of its business at an establishment resulting in 50 or more layoffs in a six month period.

The quantum of severance pay is one week's pay per completed year of service, up to a maximum of 26 weeks.