COVID-19’s Effect on Reasonable Notice of Termination

COVID-19 is having significant economic impacts on both employees and employers. Mass layoffs are happening across Canada despite government initiatives to avoid them. Many employers are considering staff cuts to remain profitable. While terminating employment for legitimate business reasons (such as a downturn in the economy) is lawful, generally speaking, an employee terminated in these circumstances is entitled to reasonable notice of termination, or pay in lieu of notice.

What is Reasonable Notice?

Courts require employers to give terminated employees “reasonable notice” or pay in lieu of notice upon termination.  Such notice is based on a variety of factors to assist the employee in finding comparable employment.

In doing so, the courts consider the following criteria:

  1. The character of employment. For example, general labourer, middle manager, executive, professional, technical worker, etc.
  2. The length of the employee’s service. Employees are generally entitled to a longer notice period the longer they have been employed.
  3. The employee’s age. Employees close to retirement are generally entitled to a longer notice period.
  4. The availability of comparable employment.

For more information in general see my earlier article “How much notice/severance should I get after being fired?“.

Reasonable Notice in a Poor Economy

The state of the economy can influence the availability of comparable employment and, in turn, can likewise affect the length of reasonable notice awarded by courts.

There are arguments on all sides as to how a general economic downturn should affect the reasonable notice period. Employees argue that it should be increased because they may have more difficulty finding new employment when jobs are scarce. Employers argue that they do not have the financial resources to provide employees with a longer notice period, and the pay and benefits that go with it.

Generally, courts in Ontario have favoured employees:

  • They have often sided with employees that an economic downturn should extend the notice period. For example, in Zoldowski v Strongco Corporation (“Zoldowski”), the Court increased the notice period in part because of the “economic climate of Southern Ontario and particularly the GTA”, and its impact on the employee’s ability to find alternative employment.
  • They have rejected the idea that a specific employer’s economic difficulties are a basis for reducing the reasonable notice period. In Michela v. St. Thomas of Villanova Catholic School (“Michela”), the Court of Appeal rejected this argument, reasoning that the “character of employment” factor was about the nature of the employee’s position, not the employer’s finances. While those finances may be the reason for the termination, “they justify neither a reduction in the notice period in bad times nor an increase when times are good.”

Nevertheless, COVID-19 may have a Different Affect on Reasonable Notice

Despite its decision in Michela, the Court of Appeal left open the possibility that a more general economic crisis may limit the reasonable notice period by approving and referencing the following passage in a 1982 High Court decision, Bohemier v. Storwal International Inc. (“Bohemier”):

It seems to me that when employment is unavailable due to general economic conditions, there has to be some limit on the period of notice to be given to discharged employees even if they are unable to secure similar employment within the notice period.

The reasoning in Bohemier suggests that, where there is a general economic downturn, evidence of difficulty finding a job cannot be used to extend a notice period as was done in Zoldowski. Employers may still have to provide a lengthy notice period based on the other factors, but not one that is unreasonable in the circumstances of the broader economy.

As a result, it is unclear how the general economic conditions created by COVID-19 will affect the reasonable notice period.

While employers ordinarily have difficulty relying on their financial hardship to reduce an employee’s notice period, COVID-19 is posing new legal challenges and how the law may evolve in the face of them is uncertain.

What is certain, however, is that we have entered unprecedented times. As always, we recommend that employers avoid premature layoffs or terminations without first seeking legal advice and understanding the consequences of those decisions.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

What Employees Need to Know About COVID-19

The World Health Organization officially declared the spread of COVID-19 to be a worldwide pandemic on March 11, 2020.  The impacts of this spread are already being felt by Canadians, and they are sure to get worse before they get better. Workers should be aware of their rights and obligations in the coming months. This short primer provides an overview of some of those rights and obligations. Every employee’s situation is different and these suggestions are not provided as or a substitute for legal advice.

All Ontarians should stay informed: Government of Canada’s Response to COVID-19

I’m infected but I can’t afford not to work. What should I do?

While anyone who is infected or thinks they are infected should immediately quarantine themselves to prevent the spread of the disease, the harsh reality is that many people cannot afford to take even one day off from work if they are going to make ends meet. Employees in this position have several options open to them:

  • Figure out if you are entitled to leave under the Employment Standards Act (“ESA”). Many workers in Ontario are entitled to a variety of statutory leaves, including family medical leave, family caregiver leave, critical illness leave, sick leave, and family responsibility leave. Each leave is only available if the worker is provincially regulated and if they meet specific eligibility criteria set out in the ESA. Moreover, while various leaves might be available to the same person, statutory leaves are not necessarily paid and can sometimes offset employer-provided benefits. Workers should also keep in mind that employers may be able to request evidence to substantiate their eligibility for certain leaves.
  • Review your contract of employment and/or your employer’s policies for entitlements to sick leave or other leaves of absence. While many statutory leaves do not require employers to pay employees, some employers offer benefits beyond those guaranteed in the ESA. Many employers are also implementing special policies to address COVID-19, which may provide for enhanced benefits. Employees should check with their employers to see if they are being offered additional sick leave entitlements or alternative work arrangements, such as more generous policies on the ability to work from home. Again, keep in mind that these benefits may offset against ESA benefits and employers could likely ask for evidence to substantiate eligibility for certain entitlements.
  • Consider applying for employment insurance. Workers who are unable to work due to infection by COVID-19 may also be eligible for security benefits from various government programs. For example, on March 11, 2020, the federal government announced that it is waiving the one-week waiting period for Employment Insurance for employees quarantined, or directed to quarantine themselves, because of COVID-19. Some employees in Ontario might also be eligible for workers’ compensation through the Workplace Safety and Insurance Board, depending on the risks associated with their work and how they became infected, among other things.

If you need more information about Employment Insurance (EI) you can read the earlier article on “the Basics of Employment Insurance (EI)“.

Can my employer make me stay home if they think I have COVID-19?

Probably not, but this depends on why they think you’re infected and on the nature of your workplace. Employees in Ontario are protected by human rights legislation, such as the Ontario Human Rights Code (“Code”). Among other things, the Code prohibits discrimination in employment on the basis of disability, ethnic origin, place of origin, race, and family status. Diseases, such as COVID-19, engage the protected ground of disability because it covers medical conditions that carry significant social stigma. This protection also extends to a perceived disability or medical condition, meaning it may still be a violation of the Code if an employer discriminates against a worker they think is infected even if the worker is perfectly healthy. The Code may also be breached where employers discriminate against individuals or communities because of an association, perceived or otherwise, with COVID-19, for example because the individual is originally from or has travelled through regions that are believed to be suffering more greatly from the spread of the disease.

Someone in my family is infected and I need to care for them or others now that they are quarantined. Do I get time off from work to do so?

Maybe. As noted above, employees in Ontario are entitled to a range of statutory leaves, including family medical leave, family caregiver leave, critical illness leave, and family responsibility leave. These may be accessible to workers needing time off to take up family responsibilities during the COVID-19 pandemic. In addition, in certain circumstances, denying a person time off to care for family members may amount to a breach of the Code on the basis of family status. Note, though, that not every caregiver situation will fall into that category. While employers are expected to make reasonable efforts to accommodate legitimate family responsibilities, employees are equally expected to cooperate with that accommodation process and, if possible, to make alternative arrangements to avoid absenteeism.

Do I have to tell my employer that I’m infected with COVID-19 or that I think I’m infected? Can my employer ask me if I’ve been tested? Can they ask me for my results?

If you are infected or think you are infected, then every effort should be made to stay quarantined and seek appropriate medical care. But equally important to getting yourself healthy is avoiding the spread of the disease to others. Disclosing your condition to access the benefits and protections discussed above is a key way to go about doing this. Moreover, keep in mind that most employers will welcome knowing that their staff are infected to ensure proper accommodation and workplace safety. Further, as noted above, sanctions against employees for disclosing their infection would very likely amount to a breach of the Code.

That being said, there is no general duty requiring employees to disclose their illnesses to their employers, and employers cannot generally inquire about that sort of information. Employees do have obligations when it comes to their own accommodation in the workplace, however, and employers will probably have policies in place providing for a highly confidential disclosure process to facilitate accommodation pursuant to employer obligations under the Code.

At the same time, employees should note that employers do have statutory obligations to ensure workplace safety. The ongoing spread of COVID-19, along with increasing infection rates and associated health risks, may eventually necessitate a more proactive approach by employers. This may include, among other things, inquiries about whether employees are infected. Of course, any steps taken by an employer in this respect, along with any answers given by an employee, would be subject to privacy legislation and would have to be reasonable and tailored to the circumstances.

Can I wear a mask to work?

Right now, probably not. Healthy individuals cannot really reduce their risk of infection by wearing a face mask, and there are currently no government recommendations that people do so. As a result, whether employees are permitted to wear a mask at work will depend on the workplace and the type of work being done. Employees working in the health sector, for example, may have a more reasonable basis to wear a mask because they are more likely to be exposed to infected individuals, or they may be more likely to spread the infection to people who are immunocompromised. In comparison, employees working in less dangerous workplaces that are oriented to customer service, for example in the retail industry, do not share the same risks and therefore do not share the same need for protection. In each case, employers will need to weigh their legitimate business needs against the reasonableness of each individual employee’s request. The reasonableness of the request may also change as the disease continues to spread.


Contact Will McLennan

Contact Will McLennan, the author of this article, about any employment law related questions or issues you may be facing. Call 416-304-6528 or email him at wmclennan@btlegal.ca.

Will is an Associate of the Employment Group at BT Legal. In this role, he advises on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiations, arbitrations, wrongful dismissals, breach of contract, breach of fiduciary duty, and human rights.

Before joining BT Legal, Will articled and worked as an associate at an employment firm in Toronto where he assisted employer clients in formulating practical solutions for a wide variety of workplace-related issues.

Will was called to the bar in 2018, after earning a J.D. from Schulich School of Law. Prior to attending Law School, Will obtained his Honours Bachelor of Political Science and Philosophy from McGill University.

Photograph of Will McLennan, Author of COVID-19 Article.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Bonus After Being Fired

Businesses often refuse to pay a bonus after an employee is fired, but, in some cases, the law in Ontario requires them to. Employers need carefully drafted bonus policies if they wish to avoid this obligation and employees need to know when to fight for their bonus after being fired, laid off or terminated.

Determining Whether a Bonus is Owed

The established legal test for determining an employee’s entitlement to damages on account of a lost bonus was set out by the Ontario Court of Appeal in Paquette v TeraGo Networks Inc. (“Paquette“).

In Paquette, the Court of Appeal judge noted that the motion judge’s analysis focused only on the wording of the incentive plan.  The Court of Appeal judge stated that the motion judge should have focused on whether the wording of the plan was effective to limit his right to receive compensation for lost wages (including both salary and bonus) during the period of reasonable notice.

The legal test involves consideration of the following questions:

  1. Was the bonus an integral part of the employee’s compensation package, thereby triggering a common law entitlement to damages in lieu of bonus? and
  2. If so, is there any language in the bonus plan that would restrict the employee’s common law entitlement to damages in lieu of a bonus over the reasonable notice period?

The Court relied upon the basic principle of damages for wrongful dismissal that the employee should be in the position that he would have been, had he not been wrongfully terminated. Based on this, the Court found that the employee would have received the bonus and the requirement that he be actively employed could not limit his right to the bonus, because the reason he was not working was the employer’s wrongdoing in terminating the employee.

Language In the Contract and Bonus Plan Matters

Bonus plans can be effective in restricting an employee’s entitlement to bonuses in some cases but not in all cases. The plans must be carefully drafted so that they contain clear and unambiguous terms because courts are increasingly applying detailed scrutiny to their language and wording when determining entitlement.

The language must be very clear and state restrictions to entitlements in very definite terms – with no ambiguity. For example, the commonly used restrictive clause “employee must be actively employed” or engaged in “active employment” can be interpreted in different ways. Whether an employee is actively employed during the reasonable notice or statutory notice period is not always clear.

In another case, Kielb v National Money Mart Company (“Kielb”), an employee had signed an employment contract that contained a bonus plan limitation clause that stated the bonus would not accrue and was only payable on the payout date.

The employee argued that this limitation clause was unenforceable due to its ambiguous and contradictory nature and because it contravened the Employment Standards Act. The trial judge rejected these arguments. He found the limitation clause to be unambiguous. Read in its entirety, it was clear that if the bonus payout date had fallen within the notice period, then the employer would have been obliged to honour it. Upon appeal, the Court of Appeal agreed that the language disentitled the employee . 

A Bonus Limitation Clause Needs to be Brought to the Employee’s Attention

In 2019, the Court of Appeal seems to have held that not only does a bonus limitation clause need to be clear, enforceable and unambiguous, it may also need to be brought to the workers attention.

In Dawe v The Equitable Life Insurance Company of Canada (“Dawe“), an employee was terminated without cause after 37 years of service. He sued for wrongful dismissal.  The restrictive term provided that in order to participate in the plan, an employee “must be in the employ of the company at the time” the pay is processed.  The employee alleged that he was never made aware of the change to his entitlements.

The motion judge found that the employee was entitled to his bonus for the notice period because it was an integral component of his compensation and the terms of the plans did not displace his common law entitlement. The employer appealed the motion judge’s decision to the Court of Appeal. Although the Court of Appeal ultimately agreed that the language in the contract and bonus plan effectively limited the employee’s bonus entitlement after termination, the Court of Appeal did not overturn the motion judge’s decision. The Court found that there was insufficient proof indicating that the employee fully appreciated the impact of the clause on his bonus entitlement after getting fired. 

The Final Word on Bonuses after Termination

The Ontario Courts are concerned that employees know clearly what their rights are on termination. In this regard, their is an emphasis on the words used in the employers contracts and policies. Whether an employee is entitled to payment of their bonus after being terminated is difficult to know with any certainty for laymen and laywoman. This area of the law is currently in flux. The Supreme Court of Canada is currently opining on this issue and the law could change with their next decision.

While I ordinarily try to avoid shameless plugs, legal advice is critical in these circumstances and should be sought out.

Suggested recommendations for employers:

  • Keep in mind that, if there is nothing that states otherwise, employees are entitled to bonus payments during the period of reasonable notice. As well, even if there is a contract or policy that says otherwise, it may not be enforceable, particularly where the result is harsh.
  • The use of clear, unambiguous language is critical but is difficult to achieve in practice. Seek legal advice when drafting employment agreements, especially when including limiting language. The courts have clearly shown their willingness to rule against employers where there is any ambiguity.
  • Structure compensation packages for new hires such that the bonuses are not an integral part of compensation, as well as including limiting language.
  • Stipulate within the bonus plan that employees have no entitlement to bonuses during periods of reasonable notice. This limiting language must be clear and unambiguous.
  • Create and practice a fair and clear process when assessing entitlements to a discretionary bonus for the period up to an employee’s dismissal. 
  • Conscientiously document performance issues or other issues that may influence bonus eligibility as per applicable bonus policies or employment contracts.

Suggested recommendations for employees:

Employees need to recognise the importance of understanding all terms of their contract before signing it. Suggested course of actions for employees include:

  • Employees should not make assumptions as to whether or not they are entitled to bonuses, particularly where they have accrued. 
  • Employees need to take proactive steps to seek advice before signing any agreements.
  • Bargain for better terms in contracts before signing them.
  • Explore bonus claims even if the bonus plans appear to preclude them from payment

The bottom line is that there continues to be uncertainty regarding the rules around assessing an employee’s right to a bonus after dismissal. Courts strictly scrutinise wordings of bonus plans and employment contacts as part of their decision processes. In the end, employers need to ensure that their bonus policy includes clear, unambiguous language regarding the entitlements of employees upon dismissal.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Negotiating Maximum Termination Pay and Severance Pay

Often, people who lose their job assume that if they receive any termination pay, severance pay, or pay in lieu of notice then they must have been properly compensated for being fired. This is far from the case. There are many factors and considerations a person should be aware of when figuring out what their termination entitlements are and more often than not an employment lawyer can help them get what is fair.

Statutory Minimum Notice Periods VS Common Law Notice Periods

Upon being fired, an employee is entitled to receive either (1) working notice, or (2) pay-in-lieu of notice. Working notice is not unusual but more often than not an employee is unhappy about being fired and an employer is concerned that the employee may do something to hurt the employer’s business while working to the end of the notice period. For that reason, employers usually chooses to terminate the employee immediately and, provide pay in lieu of notice.

The Employment Standards Act contains only the minimum entitlements that employees must receive on termination. Likewise, the Canada Labour Code sets out the minimum notice periods and severance entitlements for federally regulated employees (i.e. banking and telecommunications). However, just like the minimum wage, most employees should get a lot more than the minimums.

Judge made law or otherwise the law made by the Courts is called the “common law”. It entitles most employees to “reasonable notice”. Reasonable notice is much greater than the statutory minimums. Employees default to getting common law reasonable notice, unless they have a written employment contract that says otherwise.

There is no set formula to calculate common law notice. Generally, it is accepted that the average short-term employee is owed three to six months of notice, a long-term employee in a senior position may be owed up to 24 months or more, and somewhere in the middle for the other lengths of employment. How senior the employee’s position is will also be a factor. For example, a vice president or manager may be entitled to higher pay in lieu of notice that an employee doing a low level job, even for the same length of time. The employee’s age and the availability of alternative employment are also factors the Courts consider.

You can learn more about ‘Reasonable Notice’ and what the appropriate length is for different employees in my earlier article on “How much notice/severance should I get after being fired?.”

Termination Clauses

A termination clause in an employment contract alters an employee’s entitlements to common law reasonable notice. While it could technically provide for more, more often than not, employers include termination clauses to limit what an employee would otherwise get after being fired. Termination clauses cannot limit entitlements to below the minimums.

Where there is a valid and enforceable termination clause, an employee would not be successful if they attempted to seek more in a wrongful dismissal action. Fortunately, the Courts are often persuaded to strike out termination provisions. There are a number of different reasons that a court might find a termination clause unenforceable, such as pressure being put on the employee at the time of signing of the contract or where the limits on the severance pay are less than the minimums. If the termination clause is successfully struck out common law notice applies.

An experienced employment lawyer can offer advice on options on how to deal with terminations — for example whether one should sue for wrongful dismissal or alternately file a claim for termination pay or severance pay with the Ministry of Labour. It should be noted that a person cannot do both – sue for wrongful dismissal and file a claim for termination or severance pay. Seeking legal advice on rights is recommended to make the right decision. An employment lawyer can also help ensure payments for common law notice are maximized either through court action or a negotiated settlement.

When are termination clauses unenforceable?

In Movati Athletic Group v Bergeron, an employee had worked for about 16 months before she was terminated without cause. Purporting to rely on the termination clause in her contract, the company gave her the minimum entitlements under Ontario’s Employment Standards Act, 2000 (ESA). The employee claimed damages for wrongful dismissal arguing that the termination clause in her employment contract was not clear enough to rebut the presumption that she was entitled to common law reasonable notice of termination.

The court found the termination clause not clear and as a result, the employee received three months’ pay in lieu of reasonable notice of termination instead of her statutory minimum entitlements. This case illustrates how important it is for employers to make all efforts to expertly craft termination clause wordings and how important it is for employees to have their employment contracts checked by a lawyer before deciding whether it is actually enforceable.

A court will not enforce a termination clause that excludes minimum statutory entitlements upon dismissal as set out in the ESA or Canada Labour Code. It is illegal for an employer to provide less than the minimum standards of the ESA or Code, even if the employee has voluntarily agreed to accept a lower amount. Additionally, a court will not enforce a termination clause if it has not been properly drafted. Poorly drafted clauses are very common and any ambiguity in the language in the termination clauses usually acts against the employer.

Termination Provisions must use the clearest possible language when trying to limit an employee’s rights upon termination. Failing to use explicit language leaves the door open for varying views and interpretations of intention and, therefore, the clause may be set aside by a court for ambiguity.  Courts resolve drafting ambiguities in favour of employees.

Laws on termination clauses continue to evolve. It is important to keep abreast of changes and consult with employment lawyers when employers are drafting clauses or when you, an employee, are terminated


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

The Duty to Mitigate

When employees are dismissed with cause or without just cause, they are obligated to make a reasonable effort to find comparable new employment within the period of reasonable notice. This obligation is referred to as their “Duty to Mitigate”. In other words, employees have an obligation to do what they can to limit the damage they may have suffered from their termination. They cannot sit back and do nothing to find another job throughout the notice period and just charge that to their former employer.

In this article, we will review what employees and employers need to know about the duty to mitigate, including factors to consider and how courts decide on whether or not it is met.

What is the Duty to Mitigate?

The duty to mitigate is engaged within a reasonable period of time after an employee is terminated. Employers may argue in court that damages are not owed because the employee could have been re-employed if they tried harder to find a comparable job. In these cases the courts make thorough assessments of effort and consider a broad range of factors, circumstances and evidence. Awards will be significantly reduced if the courts find that efforts are found to be insufficient or if the employee unreasonably refused alternate comparable employment. 

Employees are expected to take steps that any reasonable person in a similar situation would take to find comparable employment and to accept that employment if it becomes available. Of note, though, a dismissed employee is not expected to accept employment that isn’t comparable to their former position. For example, a senior executive at one company wouldn’t be expected to take on an entry-level or mid-management position elsewhere just for the sake of being employed.

What does comparable employment mean?

The Ontario Court of Appeal has emphasized that “comparable employment” does not mean “any employment”. In order to be “comparable”, offers of employment must be comprehensive of the status, hours, and remuneration of the employee’s employment with his/her former employer.

How to Mitigate?

There are different ways that employees can mitigate their damages from a wrongful or constructive dismissal. An employee can accept:

  1. Re-employment with the same employer
  2. Employment in a non-comparable job position, or
  3. Employment in a comparable job position

Re-employment with the same employer

In some cases, an employer may dismiss an employee from their job, but offer a different position within the company or the same position but at a reduced pay rate or reduced level of responsibility.

Several judges have concluded that an employee can refuse an offer of alternative employment with the same employer where the work environment the employee would be returning to is hostile or would cause loss of dignity or embarrassment. Courts look at the entire context including the employee’s relationships with individuals at the former workplace, salary, and similar work conditions and responsibilities.

Lets look at three legal cases that cover different decision outcomes.

Dussault v Imperial Oil Limited

The Ontario Court of Appeal found that two employees who refused offers of employment from the purchaser of their employer did not fail to mitigate their damages since the employment that was offered was not “comparable.” In the case, the plaintiffs received less favourable offers of employment — offers where their salaries would be reduced after a period of 18 months and their prior service with Imperial would not be recognised. As a result, they both rejected the offers and brought a wrongful dismissal action against Imperial. 

The case went before the Court of Appeal during which time Imperial Oil argued that the motion judge erred in failing to find that the employees had not mitigated their damages by accepting comparable employment with Mac’s (who had purchased the previous employer). The Court rejected that argument and agreed with the decision of the motion judge that the employment offered by Mac’s was not comparable and that it would have resulted in an immediate, substantial decrease in the plaintiffs’ benefits, as well as a material drop in their base salaries. As well, the Court found there was no reason to depart from the well-established principle that “comparable employment” does not mean “any employment,” and requires an offer with comparable status, hours, and pay.

Benjamin v. Cascades Canada ULC

In this case, an employee chose to retrain instead of accepting a comparable employment offer and the Court fund that the duty to mitigate was not met. The Judge wrote: “retraining on its own is not evidence of a failure to reasonably mitigate damages; rather, if an employer can establish that comparable work is available and the employee made a choice to retrain and not to seek comparable employment, retraining would not constitute reasonable mitigation.”

This case indicates that retraining can be considered reasonable mitigation in certain cases but employers will not be required to fund retraining through the payment of reasonable notice for employees that could have otherwise secured a similar position instead. Interestingly, participating in retraining as mitigation in cases where no comparable employment is available may be considered as “reasonable”.

Evans v. Teamsters Local Union No. 31

In the third case the employee rejected the comparable employment offer and the duty to mitigate was not met. The Supreme Court of Canada ruled that an employee has to accept alternate jobs offered by the employer as part of the duty to mitigate only if a “reasonable person would accept that opportunity”. Where a reasonable person would not return to work for the same employer then there is no need to return to the company that fired you just because it is offering a comparable job.

Re-employment with a Non-Comparable Job

There is no obligation to mitigate by taking a job that is not comparable and/or not in line with what the employees training, education and experience has prepared him for. As an easy example, a former CEO does not have to take a job at McDonalds after termination.

Employment in a comparable job position

Upon finding a new comparable job, an employee’s entitlements to reasonable notice end.

Conclusion

Employer tips:

  • Employers can reduce their potential liability by offering support to departing employees. Such measures can include career counselling, outplacement services, reference letters and notifications of comparable positions with their businesses or elsewhere. 
  • Offering positive references and making efforts to end things on good terms with employees will also reduce employer’s liability by making it easier for the employees to find a new position.
  • If the employee fails to take advantage of this assistance, the employer may be able to prove a failure to mitigate thus reducing company liability for wrongful dismissal damages.

Employee tips:

  • Employees should be aware that the onus is on them to make a reasonable efforts to seek comparable employment when dismissed.
  • Always create and keep a detailed log sheet of all efforts to find a new job. Keep dates and times listed for when you updated your resume, updated your Linked In or other social media platforms, join Indeed or Monster, saved jobs to consider, worked on cover letters. Keep a list of jobs you applied for and whether or not you got interviews. The more detail and effort included in your job  search logs the easier it will be to establish your attempts to mitigate.

Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

EI: Employment Insurance Basics

Life circumstances change and can have an impact on a person’s ability to make ends meet financially. Dismissals, pregnancy, illness, accident and other family duties can put pressures on people and make it necessary to alter their regular work. The Government of Canada’s priority is to offer a number of programs to help buffer the financial hardships faced under these circumstances. One of these programs is employment insurance (EI).  

People who lose their jobs and who do not immediately have another job to go to may qualify for employment insurance.  Below we set out some information that will help explain what employment insurance is and how to go about qualifying and applying for it. 

Overview

Employment insurance used to be called Unemployment Insurance until 1996. It is a program run by the government to provide benefit payments during a period of unemployment. In Canada, employers and employees pay into the program to finance its operations. As well, the federal government makes contributions as required.

To qualify for benefits, individuals must work a certain number of hours – the duration of benefits depends on an individual’s geographic region’s unemployment rate. Employers contribute a certain amount of employee premiums. Since 1990, the Government of Canada has not had to make a contribution to the fund. 

The employment insurance system is an important program offered by the government to provide an economic safety net — it provides greater income security for Canadians. That being said, employment insurance should not be considered an option to replace a full-time salary. It is strictly “insurance” – an income supplement to help people survive between jobs or in times of other need.  For most people, employment insurance benefits will not be enough to replace the full salary that they have lost. Some people will not qualify for employment insurance because they may not have worked long enough to qualify. Some people are disqualified because they have caused their job loss. As well, employment insurance benefits are time limited. While receiving them, a person must be actively looking for work.  

Regular Benefit Program

The regular benefit program is available to people who lose their jobs without cause through no fault of their own (i.e. shortage of work or because they were employed in seasonal work), are available and willing to work but cannot find a job. 

EI benefits are available from 14 weeks up to a maximum of 45. The specific duration depends on the unemployment rate in the specific region and the amount of insurable hours that have been accumulated in the last year. 

Example:

A person who worked for a long time and lives in an area with high unemployment will receive benefits for a longer period than someone who has worked less and lives in an area with lower unemployment.

Exceptions to the regular benefit program — Fired for cause

Employees who get fired for cause, or “misconduct” will not be eligible for regular EI benefits. Getting fired for cause or “misconduct” means that the employee did something wrong on purpose and this circumstance results in refusals.

For more information on when an Employee can be terminated “for cause”, you can read my earlier article: Termination of the Employment Relationship in Ontario.

Some examples of misconduct include:

  • Threatening or violent behaviour
  • Destroying company property on purpose
  • Being late or absent from work without permission
  • Disobeying an order from your employer

Misconduct cases are not easy to define. There are complex variables and circumstances. Employees should always apply for EI even if they were fired and then allow the investigation process to follow its course. Contacting an employment lawyer is also a recommended step in terms of understanding rights and appropriate actions.

Disputing a claim

It is possible to disagree with a decision Service Canada made on an Employment Insurance (EI) application for benefits. The process is to request a reconsideration of that decision from Service Canada. 

Before requesting any reconsideration, it is important to check for any information that could change the original decision – for example, documentations that was not already submitted or new information that could affect the application. Once documentation is collected, submit it to Service Canada immediately and they will review it to determine whether the original decision could change.

Once the process is complete and a person still disagrees with the decision, there is an option to file an appeal with the Social Security Tribunal General Division. Appeals must be filed within 30 days of receiving the original decision.

Additional Benefit Programs

In addition to regular EI payments, there are other income programs. Employment insurance benefits are available to eligible claimants who:

  • are sick 
  • are having or adopting children 
  • provide compassionate care for someone – this can include their critically ill children
  • are self-employed – however they have to pay into it at the same rate as a regular employee

 How to apply for EI benefits

The Online EI Application Process Explained:

When someone loses their job, their employer provides them with a “record of employment”. This document is required to apply for EI benefits.  Sometimes the employer will send it to the government directly and if that happens, a person can get it from the government. Once a person loses their job they should apply for EI as soon as possible.  If they delay benefits may be reduced. 

The first step to applying for EI is completing an application process used to determine if a person is eligible for benefits. Access to it is online and it takes about 60 minutes to complete. If the person is disconnected during the process, their information will not be saved. Hence, it is important to have the required information close by before the EI online application begins.

The following is a list of the information required to complete the EI online application:

  • Postal code 
  • Social Insurance Number (SIN)
  • Date of birth
  • Mother’s maiden name
  • Address and postal code of residence
  • Gross salary – total earnings before deductions including tips and commissions
  • Gross salary from Sunday to your last day of work
  • Vacation pay that was received or will be received
  • Severance pay that was received or will be received
  • Pension that was received or will be received
  • Pay in lieu of notice that was received or will be received
  • Other money – specify what it is
  • Name, address, dates of employment and reason for separation — list the information of all employers in the last 52 weeks.
  • Dates over the weeks 52 weeks when there was no work, no money received and why
  • Dates and amounts for weeks in the last 52 weeks when earnings were less than $225.00 before deductions
  • If applying for Status Indian tax exemption state band number
  • Banking information — to enable direct deposit of Employment Insurance benefits.

Additional information is required when making an application for other program benefits as follows:

  • If applying for Employment Insurance parental benefits — the SIN of the other parent
  • If applying for Employment Insurance sickness benefits — the doctor’s name, address, and telephone number. The expected date of recovery may also be required.
  • If applying for Employment Insurance compassionate care benefits — information about the ill family member

Note: When submitting an EI application online, the paper copy of the Record of Employment must be submitted by mail or in person to a Service Canada office as soon as possible. 

How do employers process EI premiums?

The Canada Economic Insurance Commission (CEIC) plays a leadership role, with Employment and Social Development Canada (ESDC), in overseeing the Employment Insurance (EI) program. In September 2019 it announced that the 2020 Employment Insurance (EI) premium rate will be set at $1.58 per $100 of insurable earnings. Employers deduct the employment insurance (EI) premiums from an employee’s insurable earnings. Insurable earnings is defined as earnings from employment under any “contract of service” – namely employer-employee relationship. 

Employment insurance premiums stop when an employee’s income reaches a specific threshold set by the CEIC. The Maximum Insurable Earnings (MIE) for 2020 will increase to $54,200 from $53,100 in 2019. This amount is set for a year and represents the ceiling up to which EI premiums are collected.  What this means is that if a person earns more than the $54,200 the government uses that ceiling as the benefit marker — a person will be paying into the EI fund based on that salary and similarly, benefits received will be based on that maximum figure – not their past salary. So EI benefits will not replace income in full.

How are EI claims managed?

Information about Employment Insurance (EI) claims can be obtained through a My Service Canada Account (MSCA). People can also register for Alert-Me to receive e-mail alerts when important new EI claim information is available in the MSCA. To set up an account a person needs an EI Access code, which can be found on the first benefit statement. If it cannot be found, a person can call 1-800-206-7218 between 8:30 am and 4:30 pm local time or go to a Service Canada Office.

It is important to be accurate when filling out required reports.  Some examples of mistakes that can be made when filing out reports are as follows:

  • Not putting the actual amount earned but rather estimating the number
  • Declaring net earnings instead of gross earnings
  • Failing to declare all the earnings received
  • Entering the wrong earnings number 
  • Incorrectly adding the number of hours or amount of earnings

Certain mistakes can delay benefit payments while others can affect the amount of benefits paid — meaning a person may be paid more or less than what they were entitled to receive. Once any mistake is noticed or if there are any changes in circumstances, Service Canada should be notified promptly. This will prevent any future problems with a claim.

Misrepresentation

Knowingly withholding information, make misleading statements, or misrepresenting the facts to make a false claim for benefits is considered misrepresentation. People who do this can face severe monetary penalties or prosecution. 

Misrepresentation affects future benefits. If a person discloses actions to Service Canada before any investigation begins, they may avoid monetary penalties and prosecutions that may otherwise apply.

EI Telephone Information Service

An automated telephone service is available 24 hours a day, seven days a week. Those who prefer to speak to a representative can call 1 800 206-7218 between 8:30 a.m. and 4:30 p.m., Monday to Friday, and press “0.” The line offers general information about the EI program, the Social Insurance Number (SIN), and specific details on an EI claim.

Information about claims is updated every morning from Monday to Friday. To access information about a personal EI claim, a person will need to provide their SIN and access code which is found on the benefit statement that is mailed to claimants after they apply for EI benefits.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Employee Classification Risks

The way people view and perform work is changing and Canadians must be ready to respond. Short-term engagements, temporary contracts and independent contracting characterize this type of workforce. Organizations often rely on contractors to fill key positions, help maintain labour flexibility and keep overhead costs under control. However, any organization that uses independent contractors or is considering doing so, need to be aware of the associated risks and seek the advice of experienced legal counsel.

This article sets out to use a recent Uber class action, Uber v Heller, as a precedent to exemplify the legal and financial risks associated with how companies classify workers. We will look at how the courts make decisions on classification of workers, what protection is available to independent contract workers; and finally suggest some ways businesses can build practices to protect themselves.

Workers need to understand how they are classified, what it means; and take action when there is an issue. Employers need to understand how to create and maintain proper practices to accurately assess and classify their workforce.

Let’s look at Uber v Heller more closely.

In the Uber Class Action, the plaintiffs seek $400 million in damages as well as a declaration that Uber drivers are employees (not contractors) of Uber and therefore entitled to the benefits and protections afforded by the Employment Standards Act (ESA).

Uber brought a preliminary challenge to the proposed class action on the basis that its drivers, including Mr. Heller, were precluded from proceeding through the courts as they had instead agreed to resolve any disputes through private arbitration in the Netherlands. In the end, the action was stayed in favour of arbitration. For a more detailed review of this decision see my earlier article Arbitration Clause in Employment Contract puts the Breaks on the Uber Class Action in Ontario

Mr. Heller appealed the stay decision to the Court of Appeal claiming that the arbitration clause in Uber’s driver services agreement represents an unlawful contracting out of the ESA and that the clause is unconscionable and thus invalid at law. The Court of Appeal accepted both arguments and overturned the decision of the motion judge. I also wrote about this Court of Appeal decision: Uber Class Action Given the Green Light to Proceed by Ontario Court of Appeal

So, are Uber Drivers now classified as Employees?

The Ontario courts have yet to answer the question of classification — whether Uber drivers are classified as employees. The ruling on the classification is the larger issue in the Uber case litigation. However, at this time, the court is still determining the preliminary issues of jurisdiction and the enforceability of the arbitration clause. The Supreme Court of Canada – the highest court in our country – has granted to hear Uber’s appeal.

This case clearly demonstrates the significant impact of improper classification claims on a large company. Regardless of the outcome of the Uber case in terms of classification, the case demonstrates that clarity and enforceability of the classification system used by an employer is very instrumental in protecting employers against costly litigation such as what Uber is currently involved in.

Employers must become proactive in taking action to sharply review and assess workforce compositions and ensure that appropriate classifications are in place. Employers must also understand that a worker’s title does not determine whether they are an employee or independent contractor but that it is the nature of their employment relationship that determines the classification. As well, a worker’s actual classification may differ from what the contract specifies.

How do the courts determine worker classification?

In Sagaz Industries Canada Inc., the Supreme Court of Canada outlined some of the factors to consider in determining whether a worker is an employee or an independent contractor. In the decision, the Supreme Court of Canada makes the point that there is no single test that provides a clear answer to ever-changing variables of workforce relations (hence classification of employee versus independent contractor) and that people must examine all possible factors in the relationships to form a picture of the total relationship of the parties.

Canadian courts and tribunals have developed common law tests associated with the employment relationship to determine who is an employee and who is an independent contractor. The following are key factors considered in these tests:

  • Control
  • Ownership of tools
  • Chance of profit/risk of loss
  • Business integration
  • Payment
  • The factors are weighed and considered together in determining whether a person is an employee or independent contractor.

As an example, if the relationship looks like an employment relationship wherein the employer controls working conditions and the worker is economically dependent on the employer, the worker will likely be found to be an employee.

Worker Classification Example:

The case Fisher v Hirtz, 2016 ONSC 4768 details the scope of review and analysis necessary in determining the true legal nature of employment relationships and employee classifications therein and the impact of that classification on dismissal claims.

In this case, the plaintiff sues a company for wrongful dismissal. In the end, her claim was dismissed because the court determined she should be classified as an independent contractor not an employee. Had she been deemed an employee or dependent contractor, the court would have concluded, among other things, that she did not quit but was dismissed without cause and was entitled to pay in lieu of reasonable notice.

Employee versus contractor cases result in varying decisions on classification — there is no set formula to determine classifications. Decisions must be on a case-by-case basis involving close attention to the factors in each case. In the end, the true legal nature of the employment relationship must be identified and clarified.

In determining the true legal nature of relationships the courts look at:

  • The intentions of the parties
  • How the parties themselves regard the relationships
  • The behaviour of the parties toward each other
  • The manner of conducting their business with one another.

In Fisher v Hirtz, the court followed the tiered analysis and applied the above legal principles of established methodologies and criteria. In the end, the worker was deemed a contractor as her employer assigned the work, as it did to other trades persons, but she controlled whether she would accept the assignment.

The first stage of analysis will end once the worker is determined to be an employee. If the worker is determined to be a “contractor” the analysis will continue through a second stage to decide if they are a dependent contractor or an independent contractor.

In the case cited above, during the second stage of the analysis, the court determined she was an independent contractor as she had only provided varying amounts of services over a sixteen-month period during which she also carried on business as a sole proprietor. There was little evidence of any long-term dependency.

General Overview of Independent Contractors

Essentially, contractors are self-employed service providers who manage their own businesses.

An independent contractor has more freedom to choose how they complete work but are responsible for paying their own taxes, getting their own health insurance, and paying into unemployment and workers compensation funds. The most important factor is the level of control an employer has over the worker.

In contrast, an employee works under the control of an employer and has certain benefits provided by the employer including workers compensation, unemployment insurance, and health insurance.

Protection for Contract Employees

Canadian law has not yet caught up with changes in the labour market and contract workers are generally excluded from the protections and benefits that accompany traditional paid employment.

Gig workers are generally treated as independent contractors with none of the employment rights guarantees available in more regular jobs. The Employment Standards Act (ESA) does not apply to independent contractors, volunteers or other individuals who are not considered employees under the ESA.

How can businesses and employers protect themselves?

Practice development tips:

  • Take a proactive approach to reviewing the workforce and classifying employees accordingly. This can save a lot of headaches, potential penalties and even mitigate the risk of litigation.
  • Make sure employees are not misclassified as contractors when they should be recognized as regular staff with rights under the Employment Standards Act — contact an experienced employment lawyer for advice if necessary.
  • Regularly monitor the relationship to ensure the contractor’s independent status doesn’t change. For example, a company might hire an independent contractor who becomes more engaged in the company over years. If the company’s reliance on the individual’s services grows, the individual could be deemed an employee.

Workforce Tips:

  • If there are independent contractors who are actually being treated like employees, it may be time to change their classification.
  • At time of hiring, if a worker insists that they want to be an independent contractor and not an employee, it is advisable to investigate the situation and seek legal advice before agreeing.
  • In the event of a challenge, the practical reality will govern the classification and not what is written in a contract.

Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Discipline at Work in Ontario

Being fired or getting terminated for “just cause” is only one form of discipline available to Ontario employers. Often, though, termination for cause is too harsh in the circumstances and therefore not available as an option. It is important for both employees and employers to understand what other types of discipline are available and how to act in accordance with the principles of “progressive discipline”.

This article will be focusing on discipline in the workplace aside from termination. For more information on termination see one of my earlier articles: Termination of the Employment Relationship in Ontario » Legally Speaking.

What is Progressive Discipline?

Progressive discipline is a process used to deal with any job-related behaviour that does not meet expected and communicated standards or policies regarding job performance, absenteeism or lateness, or other minor misconduct. The primary purpose of the progressive discipline doctrine is to help an employee understand that a performance problem exists and to offer opportunities for improvement. The concept behind progressive discipline is that where an employee repeatedly fails to meet the expectations of the job, the disciplinary action against him will begin with mild correction action and gradually move to more serious actions as each incident occurs — eventually permitting an employer to terminate for cause.

The law does not require employment contracts to include the employer’s approach to progressive discipline however, best practices suggest an employer should set out their approach to progressive discipline in a well-written and well-communicated policy. In this regard, they are able to refer to it specifically as necessary.

Levels of Disciplinary Action

Basic progressive discipline policy provides for four levels of discipline: verbal warning, written warning, suspension and termination. There is no one single approach applied — approaches vary depending on the company and collective bargaining agreement. For example, the discipline for a first offence may be counselling in one company yet a warning in another.

Overall, effective discipline helps to correct employee behavioural issues, increase productivity as well as help to protect a company against wrongful termination lawsuits.

Levels of disciplinary action are as follows:

  • Verbal warning
  • Written warning
  • Performance improvement plan
  • Temporary pay cut
  • Loss of privileges
  • Suspension
  • Demotion
  • Termination

Termination for cause should be considered as a last resort. It is challenging to prove terminations are justified and courts only do so in the clearest of circumstances. In exceptional circumstances, immediate termination for an act of significant or severe misconduct may be appropriate but in almost all cases, employers should be guided by the principle of progressive and corrective discipline.

Rather than straight dismissal, the goal of progressive discipline is correcting poor behaviour and creating a better and more productive employee.

What should employers do?

In instances where an employee’s performance or conduct is at issue, the employer should clearly provide the employee with the following:

  • A clear explanation of the problem
  • A list of steps that should be taken by the employee to address and correct the problem
  • Assistance to the employee to help him address and correct the problem
  • A reasonable time frame in which the problem is expected to be corrected

This process applies to any of the disciplinary action levels – i.e. Verbal or written warnings, performance improvement plans etc. Employers must give employees clear messages, actionable steps, assistance and reasonable time frames to show improvement during any stage of discipline.

What Forms of Discipline Are Not Appropriate?

Employee discipline is not about dominance or punishment. As a result, in most instances, discipline that is punitive is contrary to employment law. For example, withholding pay or suspending an employee without pay is not appropriate. Subjecting an employee to humiliation in front of coworkers, demotions or cuts in salary/pay are also considered inappropriate forms of discipline. Bullying usually involves repeated incidents or a pattern of behaviour that is intended to intimidate, offend, degrade or humiliate a particular person or group of people. It has also been described as the assertion of power through aggression. In this respect, it is punitive and not an appropriate form of discipline.

Suspension is a common form of punitive disciplinary action.

Unpaid Suspensions

According to the Ontario Court of Appeal, an unpaid administrative suspension generally triggers a constructive dismissal “unless it (is) an express or implied term of the contract that the employer (can) suspend an employee without pay.”

The Courts will assess unpaid suspensions with a higher level of scrutiny than paid suspensions. Accordingly, employers should not impose unpaid suspensions unless they are expressly permitted to do so by a contract of employment or the circumstances are such that an unpaid suspension is reasonable. In other words, if an employer imposes an administrative suspension that is neither expressly permitted by contract nor reasonable in the circumstances, they run the risk of liability for constructive dismissal damages.

Courts often look at whether the employee had the opportunity to challenge the suspension before the person who imposed the suspension in the first place. Failing to allow for this may render the suspension a constructive dismissal, wherein the employee may claim for notice for the termination of their employment and the potential for any unpaid wages during the suspension period.

A clear and well-drafted employment agreement or workplace policies and handbooks regarding suspensions will provide both the employer and employee with information on their rights.

How is the appropriate level of discipline determined?

Courts and tribunals expect employers to apply disciplinary measures fairly and consistently, taking into account any specific circumstances of the situation on a case-by-case basis.

Aside from the strict facts of the case, adjudicators consider both “aggravating” and “mitigating” factors in determining the most appropriate type and severity of disciplinary action — especially when an action as serious as dismissal is being considered. Arbitrators weigh the presence, or absence, of mitigating factors in deciding whether to uphold, reduce or rescind a disciplinary sanction.

  • Aggravating factors lead to a more substantial (harsher) penalty
  • Mitigating factors lead to a more lenient (lesser) penalty

Some examples of employee related factors that affect the level of disciplinary action taken include the following:

  • Clean employment record
  • No other disciplinary record on file
  • State of mind of employee when behaviour came into question (i.e. medical condition; emotional problems, harassment, violence etc.)
  • Whether an employee shows remorse during the investigation — i.e. admitting responsibility, offering an apology etc.
  • Wilful or Intentional insubordination and/or misconduct

Examples of some of the case related factors adjudicators consider are as follows:

  • Was the misconduct intentional?
  • Is the employee accepting responsibility for his/her actions?
  • Was the infraction an isolated incident?
  • Is this a long-term employee?
  • What is the work history of the employee?

From Policy to Practice

Policies communicate expectations to staff and guarantee that fair and consistent treatment is served to all. It is important for staff to know from the start what is expected and how their performance will be addressed should it fall short of workplace standards. Policies hold everyone accountable and need to be supported by accompanying procedures.

The following are procedures to support progressive discipline:

On-going operational procedures:

  • Hold regular manager training, and make progressive discipline policy review a prominent part of that training
  • Create a standardised form for all managers and departments to use when they write up an employee for a disciplinary infraction. Be sure they fill out the form in full.
  • Develop a system that allows easy review of disciplinary write-ups.
  • Practice early detection of issues with equal treatment of employees by different managers. Make it a point to ask about this issue during employee reviews.
  • Discipline managers if they fail to uphold company policies.

Procedures involving incompetence: Employee lacks the skills or ability to do the job.

  • Set out clear, reasonable job expectations in company policies
  • Clearly communicate job expectations to all employees
  • Bring unacceptable work to the attention of the employee promptly
  • Provide reasonable supervision, training and instruction
  • Give reasonable warning that failure to meet these expectations could result in dismissal
  • Allow for time and opportunity to meet the job expectations
  • If not improvement has emerged, dismiss the employee
  • Keep complete written records

Procedures involving misconduct: Employee breaks rules for keeping the work place efficient and safe.

Suggested steps:

  • Give the employee an opportunity to tell his/her story about the misconduct
  • Collect all the relevant facts surrounding the misconduct
  • Give a verbal warning
  • Give a written warning
  • Suspend the employee
  • As a final step in the process, dismiss the employee
  • Keep complete written records

Summary Comments

Termination of staff should be considered a last resort. The incorporation of progressive discipline in the form of policies, procedures and practices can provide effective corrective strategies to mitigate many behaviour issues and avoid disputes being taken to court. Progressive discipline is a doctrine upheld by Ontario courts, which should be part of a company policy and should be clearly communicated and adhered to.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

When Can a Resignation be Retracted?

Do you know someone who tendered their resignation and then had second thoughts? Maybe they did so in anger, or based on illness or circumstances changed. You may wonder: when can a resignation be retracted?

Here you will find the answer to that and we will look at what the courts consider when making a decision. You will find some useful tips, whether you are an employer or an employee, about what you need to know and what to do.

Can an employee retract a resignation?

In brief, an employee may be able to retract a resignation that was made with clear intent, provided that they have an immediate change of heart and quickly let the employer know. However, if an employee clearly and deliberately gives notice and the employer just as clearly accepts it, it may be too late to undo.

Decisions to resign happen for many reasons and in different circumstances. The onus is on both employers and employees to take specific steps to make sure that they get the result they want. Let’s look at some circumstances.

Employees may take back a resignation in these circumstances where the:

  • Resignation has been made with intent, yet the employee has had an immediate change of heart and quickly let the employer know;
  • Employer has not yet accepted the resignation; and
  • Employer has not acted to its own detriment or suffered any expenses by reasonably relying on it

As well, an employee may take back a resignation in circumstances where the resignation was made under emotional stress, in anger or on impulse.

How is “Intent to resign” determined by the court?

Overall, the intent to resign must be deemed voluntary, clear and unequivocal and not made under conditions of emotional stress.

Let’s look in detail based on cases that have been heard by courts, how intent to resign is determined:

Case 1: Is the intent to resign clear and unequivocal?

Recently, in English v. Manulife Financial Corporation, 2019 ONCA 612, Ontario’s highest court, the Court of Appeal, confronted a case of what constitutes a “clear and unequivocal” resignation.

In this case, Elisabeth English, a 66 year old woman was a 10-year employee at Manulife Financial. Manulife Financial was considering an upgrade to its customer service department by bringing in a new computer system. Elisabeth was near retirement age and did not want to go through the training to learn the new system. In September 2016, she provided written notice of resignation, effective Dec. 31, 2016. At the time, English told her supervisor she was not certain she wanted to retire and was assured she could change her mind if she wished.

A few weeks later, she learned that the computer system was not going to be changed so she promptly asked if she could take back her resignation. Her manager did not confirm or deny the request and she kept working. However, in November, her manager informed her that Manulife was already making plans to move on, and she was asked not to return to work on Dec. 12th.

English commenced an action against Manulife for wrongful dismissal. She maintained that she should have been allowed to keep working as she had properly retracted her resignation.

What did the court decide?

  • The motion judge concluded that Elisabeth’s letter constituted a “clear and unequivocal” resignation, and that her resignation was accepted by Manulife. Accordingly, Elisabeth had not been wrongfully dismissed.
  • The Court of Appeal held that the motion judge erred in finding a “clear and unequivoical” resignation, ruling that Elisabeth’s resignation notice was equivocal given the circumstances in which she presented it to Manulife and that she was entitled to withdraw it. Elisabeth had properly advised that she had changed her mind and her supervisor had not indicated that there was a problem with this.
  • Accordingly, since Elisabeth did not in fact resign, the Court held that her termination was wrongful and awarded her 12-months’ salary in lieu of notice.

Courts carefully consider all circumstances surrounding resignations, including the employer’s response when determining “intent” to resign”.

From this case we can see that the Court considered the employee’s request to withdraw her resignation sound as it was made in a timely manner and made before her resignation had been clearly accepted by the employer. In the end, the Court found she did not have a continuing clear intent to resign. The employer had not clearly accepted her resignation and had not acted to its detriment in relying on the resignation.

An employee really can quit and take it back later if the circumstances don’t demonstrate a clear intent and a clear acceptance of the resignation.

Case 2: Is the intent to resign offered under conditions of emotional stress?

In Upcott v. Savaria Concord Lifts Inc., 2009 CanLii 41348 (Ont S.C.) after a dispute with a fellow co-worker, the employee, Barry Upcott, told both his boss and the HR manager he was fed up and said, “I’m done”. He refused to discuss the issue. He turned in his keys, made two trips to collect some belongings, left the workplace, and left a phone message for his boss to ask about picking up the remainder of his belongings from the office. The employer interpreted the employee’s actions as a resignation; quickly deleted all of his emails, disabled his email, called his home to verbally accept his resignation and advised that a follow-up letter accepting the resignation was on its way.

The employee sued the employer, alleging that he had not really resigned because he acted in a fit of anger and should have been allowed to retract his resignation.

What did the court decide?

Despite the employee expressing a clear intention to resign, the resignation was not valid and the employee should have been allowed to come back to work. The Court reasoned that:

  • A reasonable person viewing the situation objectively would not have concluded that the employee’s words and actions amounted to a voluntary resignation and;
  • A reasonable person viewing the situation objectively would have considered that the employee went through a foolish fit of anger and he would likely retract his resignation quickly after leaving the office.

By refusing to allow the employee to come back to work afterwards, the employer engaged in wrongful dismissal. The Court awarded the employee $50,000 in damages. Although a resignation may appear clear and unequivocal and an employer has accepted it, the resignation will not be valid and can still be retracted where the employee made the resignation on impulse in a state of emotional stress.

Bottom-line

So what can we learn from these cases that will help employers and employees to make the right choices and get the results they want?

Tips for Employees

  • Make sure to take ample time to “cool off” if you have had heated arguments or are upset at work. Making important life decisions such as quitting your job should be made in a calm state of mind and emotion not in the heat of the moment.
  • If you are sure of your intent to resign, always communicate it in writing to the employer in clear and unambiguous language.
  • If you intend to resign but are not entirely sure of your decision, avoid speaking with co-workers about it and do not take any actions that are associated with resigning (like clearing your desk of items and taking them home).
  • If you want to retract your resignation, timing is critical. Notify your employer as soon as possible that you wish to retract the resignation. The courts are more likely to conclude that the resignation was not valid if you promptly take steps to rescind it.

Tips for Employers

  • If an employee submits a resignation, and you wish to move ahead with it, it is best to promptly confirm, in writing, that you have accepted that offer.
  • If an employee has resigned in the middle of an emotional outburst, especially one that is entirely out of character, it is advisable to avoid acting upon it and let emotions settle.
  • Under emotionally charged situations, consider offering the employee a chance to “cool off”. Speaking to them under calmer conditions can clarify intent.
  • Consider all conditions around the intent to resign. Always evaluate the employee’s behaviour. Is it consistent with actual voluntary intent to resign or is it unusual behaviour that may be linked to mental health issues, upsetting workplace conditions or other external factors?
  • Once you have established that the employee has resigned and voluntarily intended to do so, advise the employee in writing of the acceptance of the resignation.
  • Request that all resignations be submitted in writing.
  • Make sure you are not forcing a resignation upon an employee – ultimatums or making changes to roles/positions may be perceived as wrongful dismissals.

Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

Employee, Independent Contractor or something in between?

As an employment law lawyer, one of the most common issues I face is confusion from clients over whether they are (or a particular worker is) an “employee,” or “independent contractor.” It is important to understand how workers are classified, and what that means for them in terms of rate of pay, benefits, and legal protections upon termination. Employers must be diligent in properly classifying their workers, as failure to do so can result in serious penalties and tax consequences.

Employees vs Independent Contractors

Strict definitions for the terms “employee,” “independent contractor,” and “dependent contractor” have not been very useful, so courts have relied upon various common law tests for determining the differences between them. Despite these tests, it is not always easy to determine the proper classification of any individual worker.

Employees

A worker may be an employee under the law even if they have agreed in writing to be classified as an independent contractor, submit invoices, or use their own vehicle while completing work tasks.

If having a contract or submitting invoices doesn’t make someone an independent contractor, what does?

In determining whether a worker is an employee, there is not one single overriding factor. Each worker’s situation will be viewed independently, and several different factors will be weighed. With that being said, a worker may be an employee if some of the following factors describe their work situation:

  • The employer provides all the tools and equipment needed to perform work duties;
  • Pay does not fluctuate according to how quickly or how well work is done. For example, the worker is not paid more if a task is finished by Wednesday, instead of Friday;
  • The employer can discipline or suspend;
  • The worker does not determine what job tasks need to be completed;
  • The worker does not set his own rate of pay for his services;
  • The employer determines the location where work is performed; or
  • The employer determines when tasks need to be completed by.

If a worker is an employee under the law, then she is entitled to all the employment rights and protections found in the Employment Standards Act. These rights and protections include:

  • Minimum wage;
  • Overtime pay;
  • Vacation pay;
  • Protected leave; and
  • Notice, or termination pay in-lieu-of notice.

Independent Contractors

Factors that the Court considers in deciding on the issue are similar, but opposite, to those considerations for employees, and include:

  • The worker owns or provides the tools and equipment needed to perform work duties;
  • The worker is in business for him/her self. This means the worker has the ability to make a profit (if the work is done quickly, efficiently, or inexpensively, for example) but also that their is a risk that he looses money (if, for example, the worker under estimated his costs, or circumstances arise that make the work more expensive than anticipated);
  • The worker may be paid more or less money depending on when the job tasks are completed;
  • The worker can subcontract the job tasks;
  • The employer cannot discipline the worker but he could cancel the contract;
  • The worker can work for multiple organizations at the same time; and
  • The worker exercises some control in where or when work is done and who performs that work.

An independent contractor will not have any of the rights outlined above for employees, unless such rights have been negotiated in a valid Independent Contractor Agreement.

What does the case law say?

In Belton et al. v. Liberty Insurance Company of Canada, the Ontario Court of Appeal heard a case where the classification of insurance agents as employees or independent contractors was the central issue. Mr. Belton, and similar workers, were commissioned sales agents, selling insurance for Liberty Insurance. Each agent had signed a written employment agreement with Liberty Insurance in which they acknowledged they were independent contractors. Liberty Insurance eventually presented the agents with new contracts, which reduced their commission rates and added minimum production levels. The agents refused to sign the new contracts, and Liberty Insurance terminated their employment. The agents sued their employer for wrongful termination. The trial judge concluded that the agents were employees under the law, not independent contractors.

In reviewing this case on appeal, the Ontario Court of Appeal noted that a written agreement stating workers will be classified as independent contractors is not determinative of the proper classification under the law. The Court also outlined the specific factors the trial judge had identified as factors she had weighed in reaching her conclusion:

  1. Whether or not the agent was limited exclusively to the service of the principal;
  2. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold;
  3. Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to his service;
  4. Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission;
  5. Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?

The Court of Appeal acknowledged, as the Trial Court had, that there was no direct contact allowed between the agents and their customers regarding policy changes or renewals, all of the agents had Liberty Insurance managers, the agents were not permitted to advertise using Liberty Insurance’s name, and the agents did not have any ownership rights to their customers. Therefore, that the agents were employees of Liberty Insurance, not independent contractors.

Dependent Contractors

The courts have more recently recognized a middle ground between employee and independent contractor by the classification of some workers as “dependent contractors.”

It is important to note that the courts are not creating an entirely new third category of workers with this distinction. Instead, dependent contractors are considered a subset of “contractors,” who merit different treatment upon termination than independent contractors do.

In McKee v. Reid’s Heritage Homes Ltd., the Court of Appeal heard a case which illustrates this distinction. Heritage Homes, owned by Reid, entered into a written independent contractor agreement with Nu Home Consultant Services, which was operated by its owner McKee. McKee was to advertise and sell 69 homes for Reid, for a fee of $2,500 per home sold. Reid was to have sole use of McKee’s services until the relationship ended. The 69 homes were quickly sold, and the contractual relationship continued. The relationship even continued after Reid’s death, at which time his son-in-law, Blevins, succeeded him.

Blevins eventually decided that McKee and her sub-agents should have to work as direct employees. McKee requested the new employment agreement be put in writing, but the parties were never able to reach mutually agreeable terms. The employment relationship subsequently ended, and McKee sued for wrongful termination. After examining the relevant factors, the trial court found McKee to be an employee, and awarded her eighteen months of termination pay in lieu of notice.

In reviewing this case, the Court of Appeal looked at the classifications of employees, independent contractors and dependant contractors:

I conclude that an intermediate category exists, which consists, at least, of those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity. Workers in this category are known as “dependent contractors” and they are owed reasonable notice upon termination.

The Court of Appeal went on to explain that the first step “is to determine whether a worker is a contractor or an employee.” If the first step determines the worker to be a contractor, then step two “determines whether the contractor is independent or dependent, for which a worker’s exclusivity is determinative, as it demonstrates economic independence.”

The courts have made it clear that dependent contractors are entitled to reasonable notice, or termination pay in lieu of notice. The length of notice can be specified in an employment agreement. If there is not a valid employment agreement speaking to this issue, then the length of appropriate notice will vary on a case by case basis, determined by the weighing of several factors.

Final Thoughts

It can often be difficult to determine how a worker should be classified. There are great differences in these classifications, and those differences can have a huge impact on both employees and employers.

The fact is that that vase majority of workers classified by their employers as independent contractors are not. If you are a worker, you are probably not an independent contractor. If you are an employer, that person coming into your workplace everyday is probably an employee. Regardless of what your contract may say, a Court may decide that the worker is entitled to all the protections in the Employment Standards Act.

For employees, if you have concerns that you have been improperly classified, speak to a knowledgeable Ontario employment lawyer as soon as possible. The lawyer can go over the specific details of your employment situation and give you advice on which classification is the most appropriate for you. With this information, you will know what rights are due to you while still employed, and also at the end of the employment relationship.

For employers, I also recommend speaking to an employment lawyer if you have concerns about the proper classification of your workers. Failure to properly classify workers can result in serious penalties. You may be stuck with large severance payments because your improper classifications caused you to fail to meet the notice requirements. If workers are properly classified, these are issues that can be specified to in a written employment contract. This limits your overall exposure. A lawyer well-versed in such employment issues can help you make the best decisions for your business.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.