Federally Regulated Employers: Understanding what laws govern your workplace.

Approximately 90% of workplaces in Ontario are governed by the employment laws enacted by the Ontario government. However, some Canadians do not fall under that provincial jurisdiction, but instead are considered “federally regulated”. Federally regulated workplaces are governed by legislation enacted by the Government of Canada instead of the Province of Ontario.

Most Ontario employment law articles or publications focus on the law and issues applicable to the majority. However, if you are a federally regulation employee or employer, it is important to understand how these federal employment laws differ from the Ontario employment law.

What is a Federally Regulated Employer or Workplace?

The answer to this questions goes back to confederation. So you don’t fall asleep, I will keep it very brief. When Canada was formed, the provinces and the federal government divided up power and responsibilities into discrete buckets. Those areas which were assigned to the federal government, to this day, are the industries that are governed by the Government of Canada and it’s laws.

The industry sectors that are federally regulated, include:

  • Banks
  • Marine shipping, ferry and port services
  • Air transportation, including airports, aerodromes and airlines
  • Railway and road transportation that involves crossing provincial or international borders
  • Canals, pipelines, tunnels and bridges (crossing provincial borders)
  • Telephone, telegraph and cable systems
  • Radio and television broadcasting
  • Grain elevators, feed and seed mills
  • Uranium mining and processing
  • Businesses dealing with the protection of fisheries as a natural resource
  • Many First Nation activities
  • Most federal crown corporations, and
  • Private businesses necessary to the operation of a federal act

Is my Workplace Federally Regulated?

The Canadian Government keeps records of all Federally regulated corporations with 100 or more employees across Canada a copy of the most recently published list from 2017 can be searched through here:

List of Federally Regulated Employers

1456998 Alberta Ltd.

1507953 Ontario Inc. (Inactive)

1791949 Ontario

2635-8762 Québec Inc.

2701545 Canada Inc.

3903214 Canada Inc.

4Tracks Ltd.

591182 Ontario Ltd.

6240143 Canada Inc.

6422217 Canada Inc.

9007-6720 Québec Inc.

9064-4287 Québec Inc.

9736140 Canada Inc.

A. Beaumont Transport Inc.

A.J. Bus Lines Ltd.

Acadia Broadcasting Limited

Access Communications Co-operative Limited

Accessible Media Inc.

ADM Agri-Industries Ltd.

Administration portuaire de Montréal

Aéroport de Québec Inc.

Aéroports de Montréal

Aevitas Inc.

Agri-Marché Inc.

Agrifoods International Cooperative Ltd.

Agris Co-operative Ltd.

Air Canada

Air Canada Rouge LP

Air Creebec Inc.

Air Georgian Limited

Air Inuit Ltd/Ltée

Air North Charter & Training Ltd.

Air Tindi Ltd

Air Transat inc.

Airbus Helicopters Canada Limited

Airport Terminal Services Canadian Co.

AirSprint Inc.

Algoma Central Corporation

ALL Communications Network

All-Can Express Ltd.

Alliance Pipeline Ltd.

Alliance Pulse Processors Inc.

Alpine Aerotech LP

Alpine Helicopters Inc.

American Airlines, Inc.

Amex Bank of Canada

Andy Transport Inc. (90 employees in 2018)

Apex Motor Express Inc.

APPS Cargo Terminals Inc.

Archipelago Marine Research Ltd.

Ardent Mills

Armour Transport Inc.

Arnold Bros. Transport Ltd.

Association des employeurs maritimes

ATCO Structures & Logistics

ATI Telecom International Co.

Atlantic Towing Limited

ATS Andlauer Transportation Services LP.

ATS Services Ltd.

Autobus Campeau Inc.

Autobus Idéal Inc.

Aveda Transportation and Energy Services Inc.

Avex Flight Support Inc.

Avmax Aviation Services Inc.

AYR Motor Express Inc.

B&R Eckel’s Transport Ltd.

Bandstra Transportation Systems Ltd

Bank of America National Association, Canada Branch

Bank of Canada

Bank of Montreal

Banque Laurentienne du Canada

Banque Nationale du Canada

Bay Ferries Limited

Bearskin Lake Air Service LP.

Bell Canada

Bell Solutions Techniques Inc.

Bessette & Boudreau Inc.

Big Freight Systems Inc.

Bison Transport Inc.

Blackburn Radio Inc.

Blue Ant Media Inc.

BNP Paribas

Bradley Air Services Limited

Bragg Communications Inc.

Brasseur Transport Inc.

Brett-Young Seeds Limited

Brian Kurtz Trucking Ltd.

Bridgewater Bank

Brink’s Canada Limited

British Columbia Maritime Employers Association

Bruce Power LP

Bruce R. Smith Limited (Inactive)

Business Development Bank of Canada

BWXT Nuclear Energy Canada Inc. / BWXT ITG Canada, Inc.

C.A.T. Inc.

Calm Air International LP

Cam-Scott Transport Ltd.

Cameco Corporation

Can-Am West Carriers Inc.

Canada Cartage System Limited Partnership

Canada Council for the Arts

Canada Deposit Insurance Corporation / La Société d’assurance-dépôts du Canada

Canada Malting Company Ltd.

Canada Mortgage and Housing Corporation

Canada Pension Plan Investment Board

Canada Post Corporation

Canadian Air Transport Security Authority

Canadian Broadcasting Corporation / Société Radio-Canada

Canadian Commercial Corporation

Canadian Imperial Bank of Commerce

Canadian Light Source Inc.

Canadian Museum for Human Rights

Canadian Museum of History

Canadian Museum of Nature

Canadian National Railway Company

Canadian North Inc.

Canadian Nuclear Laboratories

Canadian Pacific Railway Limited

Canadian Payments Association

Canadian Press Enterprises Inc.

Canadian Tire Bank

Canadian Western Bank

Cancrew Enterprises Ltd.

Candu Energy Inc.

Canpar Express Inc.

Capital One Bank (Canada Branch)

Cardinal Couriers Ltd.

Cargair Ltd.

Cargill Limited

Cargo Airport Services Canada Inc.

CargoJet Airways Ltd.

Caron Transportation Systems Partnership

Cascade Aerospace Inc.

Cascade Energy Services LP

Cassens Transport ULC

Cassidy’s Transfer & Storage Limited

Cathay Pacific Airways Limited

Cavalier Transportation Services Inc.

Central Mountain Air Ltd.

CEVA Freight Canada Corp.

CEVA Logistics Canada, ULC

Challenger Motor Freight Inc.

Chartright Air Inc.

CHC Helicopter Group of Companies

Chemin de fer QNS&L

Citibank Canada

City of Ottawa

Clean Harbors Canada Inc.

Coastal Pacific Xpress Inc.

Cogeco Connexion Inc.

Cogeco Média Acquisitions Inc.

Colispro Inc.

Comwave Networks Inc.

Conair Group, Inc.

Concentra Bank

Connors Transfer Limited.

Consolidated Fastfrate Inc.

Contrans Flatbed Group LP

Contrans Services LP

Contrans Tank Group LP

Cooney Group Inc.

Corporation des Pilotes du Saint-Laurent Central inc.

Corporation du Fort St-Jean

Corus Entertainment Inc.

Cougar Helicopters Inc.

CWS Logistics Ltd.

D&W Forwarders Inc.

D.C.T. Chambers Trucking Ltd.

Day & Ross Inc.

Defence Construction (1951) Ltd.

Delta Air Lines, Inc.

Denny Bus Lines Ltd.

Desgagnés Marine Cargo Inc.

DHL Express (Canada), Ltd.

Dicom Transportation Group

Direct Limited Partnership

Distributel Communications Limited

Doug Coleman Trucking Ltd.

DP World (Canada) Inc

Dufferin Communications Inc.

Earl Paddock Transportation Inc

Eassons Transport Ltd.

ECL Carriers LP

Edmonton Regional Airports Authority

Elgin Motor Freight Inc.

Enbridge Employee Services Canada Inc.

ENTREC Corporation

Envoy Air Inc.

Equitable Bank

Erb Enterprises Inc.

Execaire, a division of I.M.P. Group

Execulink Telecom Inc.

Executive Flight Centre Fuel Services Ltd.

Expertech Network Installation Inc./Expertech Bâtisseur de reseaux Inc

Export Development Canada

F. Ménard Inc.

Fairchild Radio Group Ltd.

Fairchild Television Ltd.

Farm Credit Canada

Federal Express Canada Corporation

Fedex Freight Canada Corp.

FedEx Ground Package System, Ltd.

Fednav Limited

Ferus Inc.

Fibernetics Corporation

Field Aviation Company Inc.

First Canada ULC

First Team Transport Inc.

Floradale Feed Mill Limited

Flying Colours Corp

Formula Powell L.P.

Freshwater Fish Marketing Corporation

Fugro Canada Corporation (INACTIVE)

G. Zavitz Limited

G3 Canada Limited

Gardewine Group Limited Partnership

GCT Canada Limited Partnership

Gestion TForce Inc.

Gilbert M. Rioux et Fils Ltée.

Glen Tay Transportation (Inactive)

Golden West Broadcasting Ltd.

Grace Transport Inc.

Grain Millers Canada Corp.

Great Canadian Railtour Company Ltd.

Great Slave Helicopters Ltd.

Greater Toronto Airports Authority

Greyhound Canada Transportation ULC.

Grimshaw Trucking L.P.

Groupe Galland

Groupe Guilbault Ltée

Groupe Robert

Groupe Transport Morneau inc.

Groupe TVA Inc.

Groupe TYT Inc.

Groupe V Média

H & R Transport Limited

Halifax Employers Association

Halifax International Airport Authority

Hallcon Crew Transport Inc.

Hammond Transportation Ltd.

Hapag-Lloyd (Canada) Inc

Harvard Broadcasting Inc.

Hélicoptères Canadiens Limitée/Canadian Helicopters Limited

Helijet International Inc.

Henri Sicotte inc

Hensall District Co-operative Inc.

Highland Moving and Storage Ltd.

HomeEquity Bank

HSBC Bank Canada

Hudbay Minerals Inc.

Hudson Bay Railway Company

Hughson Trucking Inc. (Inactive)

Hutton Transport Limited

Hyndman Transport Limited

ICICI Bank Canada

ILTA Grain Inc.

IMP Group Limited – Aerospace Division

Industrial and Commercial Bank of China (Canada)

Information Communication Services

Inmarsat Solutions (Canada) Inc.

Innotech Aviation, a division of IMP Group Limited

Instech Télécommunication Inc.

Intek Communications Inc.

International Air Transport Association

International Development Research Centre

International Truckload Services Inc

Iron Range Bus Lines Inc.

Island Tug and Barge Ltd.

J & R Hall Transport Inc.

J & T. Murphy Limited

Jade Transport Ltd.

Jay’s Transportation Group Ltd.

Jazz Aviation L.P.

Jervis B. Webb Company of Canada, Ltd.

Jet Transport Ltd.

Jim Pattison Industries Ltd.

Jones Feed Mills Limited

JPMorgan Chase Bank, N.A.

KEB Hana Bank Canada

Keewatin Air LP

Keith Hall & Sons Transport Limited

Kelowna Flightcraft Group of Companies

Keltic Transportation Incorporated

Kenn Borek Air Ltd.

Kindersley Transport Ltd.

Kleysen Group Ltd.

Kriska Holdings Limited

Kunkel Bus Lines Ltd.

L. Bilodeau et Fils ltée

L. Hansen’s Forwarding Ltd.

L. Simard Transport Ltée

L3 Technologies MAS inc

Laidlaw Carriers Bulk LP

Laidlaw Carriers Van LP

Lakehead Freightways Inc.

Le Groupe de Sécurité Garda Inc

Le Groupe Océan Inc.

Ledcor Industries Inc.

Les Distributions Carl Beaulac Inc.

Les Investissements Nolinor Inc.

Les Services JAG Inc.

Linamar Transportation Inc.

Link-on Communications Inc.

Lockheed Martin Commercial Engine Solutions

Logistec Arrimage Inc.

Lomak Bulk Carriers Corp. (Inactive)

Louis Dreyfus Company Canada ULC.

Lower Lakes Towing Ltd.

Mackie Moving Systems Corporation

Maersk Supply Service Canada Ltd.

Mantei’s Transport Ltd.

Manulife Bank of Canada

Marine Atlantic Inc.

Maritime Broadcasting System Limited

Masterfeeds Inc.

McClay Group Ltd.

McKeil Marine Limited

McKevitt Trucking Limited

Mediterranean Shipping Company (Canada) Inc.

Menzies Aviation (Canada) Ltd.

Midland Transport Limited

Minimax Express Transportation Inc.

Moe’s Transport Trucking Inc.

Montship Inc.

Morningstar Air Express Inc.

MTU Maintenance Canada Ltd.

MUFG Bank, Ltd., Canada Branch

Mullen Oilfield Services L.P.

Mullen Trucking Corp.

Multiboard Communications Inc.

My Broadcasting Corporation

National Arts Centre Corporation

National Capital Commission

National Gallery of Canada

National Museum of Science and Technology / Musée national des sciences et de la technologie

NAV CANADA

New Hope Transport Ltd.

New United Goderich Inc.

New-Life Mills, a Division of Parrish & Heimbecker, Limited

Nordion (Canada) Inc.

Normandin Transit Inc.

North Cariboo Flying Services Ltd.

Northern Communications Services Inc.

Northumberland Ferries Limited

Northwestel Inc.

Nuclear Waste Management Organization

Oceanex Inc.

Oculus Transport Ltd.

Office d’investissement des régimes de pensions du secteur public

Offshore Recruiting Services Inc.

Ontario Potato Dist. (Alliston) Inc. 1991

Ontario Power Generation

OpsMobil

ORANO Canada Inc.

Ornge Global Air Inc.

Ottawa Macdonald-Cartier International Airport Authority

P&H Milling Group, a division of Parrish & Heimbecker, Ltd.

Pacific Coastal Airlines Ltd.

Pacific Western Transportation Ltd.

Papineau Int. S.E.C. (Transport Papineau International)

Parrish & Heimbecker, Limited

Paterson GlobalFoods Inc.

Paul’s Hauling Ltd.

Pe Ben Oilfield Services L.P.

Pelmorex Corp.

Pembina Pipeline Corporation

Penske Logistics LLC

Perimeter Aviation LP

Pioneer Hi-Bred Production Company

Plains Midstream Canada

Pole Star Transport Incorporated

Polymer Distribution Inc.

Portage Transport Inc.

Porter Airlines Inc.

Premier Aviation Quebec inc.

Presidents Choice Bank

Primus Management ULC.

Prince Rupert Grain Ltd.

Provincial Aerospace Ltd.

Purolator Inc.

Q-Line Trucking

Quik X Transportation Inc.

Radio-Onde Inc.

Rawlco Radio Ltd.

Raytheon Canada Limited (The North Warning System)

Remorquage St-Michel Inc.

Richardson International Limited

Ridley Terminals Inc.

Rigel Shipping Canada Inc.

Rio Tinto Alcan, Installations Portuaires

RNC MEDIA INC.

Rockwater Energy Solutions

Rogers Communications Inc.

Rogers Foods Ltd.

Rosedale Transport Limited

Rosenau Transport Ltd.

Roxborough Bus Lines Limited

Royal Bank of Canada

RSB Logistic Inc. (Inactive)

Ryder Truck Rental Canada Ltd.

S.G.T. 2000 Inc.

Safeco Driver Services Inc.

Sander Geophysics Limited

Sanimax EEI Inc.

Scamp Transport Ltd.

Schneider National Carriers Canada

Scoular Canada Ltd.

Seaboard Liquid Carriers Limited

Seaspan ULC

Secunda Canada LP

Securiguard Services Ltd.

Securitas Transport Aviation Security Ltd.

Sentrex Communications Co.

Serco Canada Inc.

Service Trans-West inc.

Shaw Communications Inc.

Sheffield Moving & Storage Inc

Sirius XM Canada Inc.

SITA Information Networking Computing Canada Inc.

Sky Regional Airlines

Skyservice Aviation Inc. and Sky Service F.B.O Inc.

Snowbird Aviation Services Limited Partnership

Société de transport de l’Outaouais

Société du Vieux-Port de Montréal inc.

Sogetel inc.

Spearing Service L.P.

Speedy Transport Group Inc.

Standard Aero Limited

Standard Aero Ltd.

State Street Bank & Trust Company – Canada Branch

Stericycle ULC.

Steve’s Livestock Transportation (Blumenort) Ltd

Stingray Radio Inc.

Strategic Aviation Services Ltd.

Sunbury Transport Limited

Sunwest Aviation Ltd.

Sunwing Airlines Inc.

Sutco Contracting Ltd.

Swissport Canada Inc.

Symcor Inc.

Systèmes Danfreight inc.

Systemex Communications (S.C.) Inc.

T&T Trucking Ltd.

Tangerine Bank

Tata Communications (Canada) Ltd

Tbaytel

Teekay Shipping (Canada) Ltd.

TekSavvy Solutions Inc.

Téléfilm Canada

Telesat Canada

TELUS Communications Company

Tenold Transportation Ltd

TeraGo Networks Inc.

TFI Transport 5 LP

TFI Transport 7 LP

TForce Final Mile Canada Inc.

The Bank of Nova Scotia

The Calgary Airport Authority

The CSL Group Inc.

The Jacques Cartier and Champlain Bridges Incorporated

The Royal Canadian Mint

The St. Lawrence Seaway Management Corporation

The Toronto Terminals Railway Company Limited

The Toronto-Dominion Bank

The Trimac Group of Companies

Thompsons Limited

Thompsons Moving Group Limited

Three Star Trucking Ltd.

Thunder Airlines Limited

Tier2 Technologist LTD

Titanium Transportation Group Inc.

Top Aces Inc.

Toronto Port Authority

Total Oilfield Rentals Ltd

Trailwood Transport Ltd.

Trans Mountain Canada Inc.

Trans-Frt. McNamara Inc.

TransCanada Pipelines Limited

Transit Windsor

Transport A. Laberge & Fils Inc.

Transport Bellemare International

Transport Bernières inc. (Groupe Bernières)

Transport Bourret inc.

Transport Couture

Transport Gilmyr inc

Transport Grayson Inc.

Transport Guilbault Inc.

Transport Guy Bourassa Inc.

Transport Hervé Lemieux (1975) Inc.

Transport Inter-Nord Inc.

Transport Jacques Auger Inc.

Transport Jocelyn Bourdeau Inc.

Transport Lyon Inc.

Transport Sylvester & Forget Inc.

Transport TFI 1, SEC

Transport TFI 15 S.E.C. (Transport Grégoire)

Transport TFI 16 SEC

Transport TFI 19 SEC (Durocher International)

Transport TFI 22, S.E.C.

Transport TFI 23, S.E.C./TFI

Transport TFI 4 SEC

Transport TFI 6 S.E.C. (Transport Besner)

Transport Transbo Inc.

Transwest Air Limited Partnership by its General Partner Transwest Management Ltd.

TransX Ltd.

Trappers Transport Ltd.

Travelers Transportation Services Inc.

Trentway-Wagar Inc.

Tri-Line Carriers LP

TRJ Telecom Inc.

Trouw Nutrition Canada Inc.

Troyer Ventures Ltd.

TST Solutions L.P.

Universal Coach Line Ltd.

UPS Canada

V.A. Inc.

V.T.L. Express Inc.

Van-Kam Freightways Ltd.

Vancouver Airport Authority

Vancouver Fraser Port Authority

Vector Aerospace Engine Services – Atlantic

Vedder Transport Ltd.

Verreault Navigation inc.

Verspeeten Cartage Ltd.

VIA Rail Canada Inc.

Vianet Inc.

Vidéotron ltée

Vista Radio Ltd.

Viterra Inc.

Voyageur Aviation Corp.

Wallenstein Feed & Supply Ltd.

Warren Gibson Limited

Wasaya Airways Limited Partnership

Wells Fargo Bank N.A., Canadian Branch

West Wind Aviation LP

Westcan Bulk Transport Ltd.

Westcoast Energy Inc.

Western Logistics Inc.

Western Stevedoring Company Limited

WestJet, an Alberta Partnership

Westman Media Cooperative Ltd.

Westower Communications Ltd.

Westshore Terminals Limited Partnership

Wills Transfer Limited

Wilson’s Transportation Ltd.

Windsor Disposal Services Ltd.

Winnipeg Airports Authority Inc.

WireComm Systems (2008), Inc.

Withers L.P.

XPO logistics Freight Canada, Inc.

XTL Transport Inc

Yellowhead Helicopters Ltd.

YRC Freight Canada Company

Zayo Canada Inc.

Zim Integrated Shipping Services (Canada) Co. Ltd.

What are the differences between Federally Regulated and Provincially Regulated workplaces?

The difference between federally regulated and provincially regulated workplaces comes down to the difference in the written laws (statutes) that govern. While most Ontario workplaces are governed by the Employment Standards Act, the Ontario Human Rights Code, and the Occupational Health and Safety Act, federally regulated workplaces are governed by the Canada Labour Code and the Canadian Human Rights Act.

Employment Standards Act vs the Canada Labour Code

While both the federal and provincial governments have established minimum employment standards to protect employees, the differences between the Employment Standards Act and the Canada Labour Code are significant, especially in the area of termination and wrongful dismissal.

In Ontario, under the Employment Standards Act, employers can fire employees at any time for any non-discriminatory reason. However, under the Canada Labour Code, employees in non-management positions cannot be terminated without just cause. In Wilson v Atomic Energy Canada, the  Supreme Court of Canada confirmed that a federally regulated employer cannot simply dismiss an employee on a “without cause” basis and provide severance arrangements.

In other words, most federally regulated employees cannot be fired unless they are guilty of serious misconduct (i.e. just cause) or if their position is legitimately no longer required (i.e. after the closure of a business). Unlike most Ontario employees, employees regulated by the Canada Labour Code have a right to keep their job.

As I discussed in more detail in my article on Termination of the Employment Relationship: “Termination for cause has been described by the Ontario courts as the “capital punishment” of the employment relationship. It is typically very difficult for an employer to prove willfull misconduct or cause.” Accordingly, federally regulated employees have much greater job protection than the majority of Ontario workers.

Human Rights

In terms of Human Rights law the difference between federal and provincial employers is minimal. All employers are entitled to work free from discrimination.


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.

Constructive Dismissal: A Good Reason to Quit

What is Constructive Dismissal?

“Constructive Dismissal” is defined as a substantial and unilateral change to the terms or working conditions of employment. In other words, a constructive dismissal describes situations where, although an employer has not directly fired an employee, its actions or its failure to address issues, leaves an employee feeling like they have no choice but to resign. Another way to think about constructive dismissal is that it arises when an employee has a good reason to quit their job.

A relocation of the workplace from Toronto to India is a clear example of a substantial change. The determination becomes more nuanced and complex, however, in less obvious situations. For example:

  • Where an employee is moved from a salaried position to one based on commission; or
  • Where an employee is being transferred from a non-customer facing role to one that requires them to interact with customers regularly, although at the same rate of pay.

What makes a change “substantial”?

As you may have guessed from the definition of constructive dismissal, when deciding whether an employee has been constructively dismissed, the Courts have to decide whether the change in employment was “substantial”.

Determining what is a substantial or fundamental change to an employment agreement depends on facts and circumstances. The burden to prove that the facts and circumstances amount to a substantial change in employment is on the employee.

To provide guidance on the meaning of substantial in the context of a constructive dismissal, this article will look at the three situations in which constructive dismissal can occur:

  1. Where there is a change to some or all of the terms of employment (i.e. salary, hours of work, location, role, responsibility, etc.);
  2. Where the workplace becomes unsafe, hostile or toxic (i.e. a change in working conditions); and
  3. Where multiple small changes taken together become a substantial change.

Constructive dismissal due to substantial changes to the terms of employment.

In the eyes of the Court, employers are generally entitled to make minor unilateral amendments to employment terms when those changes are reasonable and/or contemplated as part of the employment agreement. The Courts do recognize that employers should be allowed some flexibility in structuring jobs as part of their authority in managing the business.

In deciding whether the change is substantial, the Courts apply an objective legal analysis. This means it doesn’t matter what the employee believes happened. The Court looks at the facts and circumstances and asks if a reasonable person in the employee’s shoes would find that the terms of employment had been significantly altered by the employer. They consider the nature and extent of the changes with specific attention and consideration to the intention of the parties at the time the employment contract was formed.

To prove constructive dismissal, the key is to be able to demonstrate that the change(s) were severe enough that a fundamental part of the agreement was altered.

Examples of Changes to Employment Terms

Some of the “substantial” changes taken by employers might look like:

  • a demotion;
  • a change to the employee’s reporting structure or job responsibilities;
  • a reduction to an employee’s compensation of more than 10%;
  • a change to an employee’s hours of work from day shift to a night shift; or
  • relocating the employee’s workplace resulting in a drastically increased or unreasonable commute.

Another example of a substantial change could be an unpaid suspension or layoff. As I discussed in more detail in Temporary Layoffs: What Everyone Needs to Know, employers are not allowed to layoff employees when it isn’t a written term of their contract or a standard industry practice. Accordingly, being laid off in almost every instance is a constructive dismissal.

Constructive dismissal due to unsafe, hostile or toxic work environment.

Employers are required to provide a safe and healthy work environment and that obligation is legally regulated through Ontario occupational health and safety legislation. An unsafe or unhealthy work environment may result in an employee being constructively terminated.

In cases of poor work environments, the Court will consider the facts and circumstance and apply an objective test. Is the workplace so unsafe, hostile or toxic that a reasonable person would not be expected to return? If the answer is yes, then the employee was constructively dismissed.

The following are some of the factors that will be considered to determine if constructive dismissal has occurred:

  • The serious wrongful behaviour is evident and its nature is such that it renders continued employment impossible;
  • The serious wrongful behaviour has been persistent or repeated;
  • The test applied is objective – that is, it is confirmed that someone in the employee’s shoes would consider the environment poisoned

Examples of unsafe, hostile, or toxic workplaces.

A good example of a toxic work environment is one in which the employer fails to prevent workplace harassment or bullying. Other examples include workplaces where unjustified criticism or vague and unfounded accusations of poor performance (especially by persons of authority) exist, a culture where sexism or racism is tolerated (if not actively encouraged), or where an employee is subject to extreme stress and unreasonable expectations or demands.

Multiple Small Changes Overtime May Constitute A Substantial Change to Employment

Although minor changes will not amount to constructive dismissal, a series of small changes might. The key is that the extent of the changes made to the terms of employment must add to a total change that is substantial or makes the employee feel that the employer is trying to have them quit.

For example, an employer might make a minor reduction in salary in January, then reduce employee benefits in March, then a small reduction in hours in April, perhaps then a restructuring to change an employees role to have less overall responsibility in July.. The total effect of those changes may add up to a substantial change to the terms of employment.

Employee’s Options In the Face of Substantial Unilateral Changes in Employment

An employee’s options in the face of a potential constructive dismissal are set out by the Ontario Court of Appeal in a case called Wronko v. Western Inventory Service Ltd. (which I’ve written about before in How to Change Employment Contracts). Those options are:

  1. Accept the change in the terms of employment, either expressly or implicitly through apparent agreement, in which case the employment will continue under the altered terms;
  2. Reject the change and sue for constructive dismissal if the employer persists in treating the employment relationship as being subject to the varied term; or
  3. Make it clear to the employer that they are rejecting the new term and insisting on the original terms of employment.

If an employee decides to continue to work under changed conditions, they may not be able to bring the matter to the courts at a later date. This legal principle is called condonation. If an employee condones the change through conduct, then they have implicitly accepted the change.

Risks on Employees

Usually, to claim constructive dismissal the employee actually has to quit and then sue. In this respect there is always a risk to the employee who makes a claim for constructive dismissal. If the employee is not able to prove that they have been constructively dismissed, then they will be found to have resigned from their employment. Having resigned, the employee will not be entitled to any damages for wrongful 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.

Temporary Layoffs: What Everyone Needs to Know

Temporary layoffs are an attractive option for employers facing economic downturn, business or financial troubles, or a global pandemic like COVID-19. While it may appear to be a good way to eliminate staff without paying termination pay or severance, there are many misconceptions that both employers and employees have.

This article aims to help you understand everything you need to know about temporary layoffs under Ontario employment law and should be used as a guide whether you are a business owner considering laying off staff or an employee who was laid off.

Temporary Layoffs Are Not Allowed for Most Employees

The first and most important thing to understand about temporary layoffs is that in most situations they are not allowed. There is no implied right to layoff an employee. Even though the ESA provides guidelines concerning the maximum length of a temporary layoff, the Ontario Courts do not permit an employer to layoff, or suspend an employee, without pay, unless:

  1. It is one of the written terms in the employment contract; or
  2. The layoff or suspension was agreed to by both employee and employer—this agreement can take the form of a written contract, a well-communicated policy or indirectly through a widely known practice within your employer’s organisation or industry (i.e. seasonal workers, construction industry, etc…).

Any layoff (even a temporary one) that doesn’t meet the above test is a constructive dismissal. The foundational case on this issue is Stolze v. Addario, 1997 CanLII 764, by the Ontario Court of Appeal, in which the Court wrote:

… the absence of evidence of a policy or practice within the employer company of laying off “key” employees, constitutes the lay-off a repudiation of a fundamental term of this employee’s contract. He was, therefore, constructively dismissed.

Read my earlier article Termination of the Employment Relationship in Ontario for more information.

Only if the employer makes it over this first and difficult hurdle, does the law concerning temporary layoffs become relevant.

What is a Temporary Layoff?

A temporary layoff is when a employee’s hours are reduced or eliminated on a short term basis with the intention that they will shortly be recalled. At the time an employee is laid off, an employer is not required to provide a specific recall date, however, if they do, they must generally comply with it.

The maximum length of a temporary layoff is specifically defined in the Employment Standards Act (“ESA”). If an employee’s layoff lasts even just one day longer than the specified time set out in the ESA, then the employee has been terminated retroactive to the first date of the layoff. As a result, that terminated employee is entitled to pay in lieu of notice and severance. 

The definition of temporary layoff according to the Employment Standards Act is as follows:

What constitutes termination
56 (1) An employer terminates the employment of an employee … if, …

(c) the employer lays the employee off for a period longer than the period of a temporary lay-off.

Temporary lay-off
(2) For the purpose of clause (1) (c), a temporary layoff is,

(a) a lay-off of not more than 13 weeks in any period of 20 consecutive weeks;

(b) a lay-off of more than 13 weeks in any period of 20 consecutive weeks, if the lay-off is less than 35 weeks in any period of 52 consecutive weeks and,

(i) the employee continues to receive substantial payments from the employer,

(ii) the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,

(iii) the employee receives supplementary unemployment benefits,

(iv) the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,

(v) the employer recalls the employee within the time approved by the Director, or

(vi) in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee;

If the specific requirements for a layoff to be considered “temporary” are not met than that layoff is a termination. In a nutshell (and explained in more detail below), if your layoff lasts longer than the temporary layoff time periods or does not meet any of the conditions set out above, the employer is considered to have terminated the employee’s employment. The employee will therefore be entitled to termination pay, severance or damage for wrongful dismissal

Temporary Layoffs of More than 13 Weeks but less than 35 Weeks

A layoff more than 13 weeks but less than 35 weeks, can only be considered temporary where at least one of the following conditions are met:

  1. The employee continues to receive substantial payments from the employer;
  2. The employer continues to make RRSP, pension plan, or group health and/or dental insurance plan contributions;
  3. The employee receives supplementary unemployment benefits (or would be entitled to receive this benefits if not for the employee having alternative employment during this period); or
  4. the employer recalls the employee within the time approved by the Director.

Ongoing “Substantial Payments” or Benefit Plan Contributions by Employer

The payments contemplated under 1 and 2 need to have been made throughout the entire period of the temporary layoff in order to satisfy this condition. If the employer did not make regular and on going payments during the first 13 weeks of the temporary layoff or stopped making payments at any time, this condition is not satisfied.

The term “substantial payment” is not defined and will likely depend on any individuals particular employment circumstances. Employers and employees should consider getting legal advice on this requirement because it will be highly case specific.

With respect to benefit plans, specifically, the terms of the plans provided by the employer must be the same as before the layoff began (unless the employee specifically agreed to an amendment to the plan or the amendment was made for a legitimate cause such as a legislative change). Employers cannot drastically cut benefits and then continue making the reduced payment in an attempt to get around this requirement.

Supplementary Employment Benefit (SUB) Plans

The Government of Canada offers a program called the Supplementary Unemployment Benefit Plans (SUB Plans) that provides employers with the ability to set up and provide additional financial assistance to employees during a period of layoff due to temporary stoppage of work, training, or illness, injury or quarantine.

If an employer has a SUB plan, employees will likely already know about it. This plan provide to employees a top up of some amount over and above EI. For more details consider the Government of Canada’s Guide to Supplementary Employment Benefit Program.

Approval by Director of the Ministry of Labour

In special circumstances the Director of the Ministry of Labour can provide exceptions to certain employers. Employers would be obliged to inform their employees.

Other Frequently Asked Questions

How do employees recall temporarily laid off employees?

During a temporary layoff, an employer upon notice to their employee, can set a recall date requiring the employee to return. Typically, this is done by the employer providing a “recall notice” informing the employee of the return to work date.

What happens if an employee is recalled in a situation where the layoff was wrongful or not temporary?

If an employee is provided with a recall date that either (a) falls outside or afoul of the temporary layoff provisions in the ESA, or (b) in the course of a layoff that was never permitted in the first place, then the employee has two options:

  1. Return to work and abandon his claim to termination pay, severance pay and/or damages for wrongful dismissal; or
  2. Refuse to return to work and claim constructive dismissal,

Only in rare circumstances are both options available. If an employee refuses to return to work and claim constructive dismissal they would be obliged to comply with their Duty to Mitigate.

What happens if an employer is unable to recall an employee during a temporary layoff? 

If an employer is unable to recall the laid off employee for any reason, even if doing so was unintentional or through no fault of their own, the layoff becomes a termination and the employee is entitled to termination pay, severance pay and/or damages for wrongful dismissal.

What if an employee’s job is no longer available?

Generally, an employee should be recalled to the job they had before the layoff. However, if the job is no longer available, the employee must be given a similar or comparable position with the same or greater benefits and pay.

What if an employee refuses to return after a temporary layoff?

Employees are considered employed during a temporary layoff and, therefore, are required to return upon being recalled by their employer. A refusal to return may be considered job abandonment.

What about temporary layoffs for unionised workers?

The above legal information is generally applicable only to non-unionized employees. If you are in a union you need to speak with your union representatives.

What about temporary layoffs because of COVID-19?

The COVID-19 pandemic is novel and unprecedented. While it may not have an effect on the current law, it is important to understand that there is no way to know for certain how Ontario employment law might change or how the Courts may react. If you are facing a particular employment issue because of COVID-19, you should speak to a lawyer. 


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.

Termination within Probation Periods

Probation at the start of employment may seem simple, but they don’t always automatically allow employers to fire someone in their first 3 months free and clear. Probationary periods are actually legally intricate.

Employees terminated during probationary periods often accept their fate without seeking legal advice when in many cases they may be eligible for severance payments (even severance payments of several months or more). Likewise, employers may dismiss an employee within a probationary period only to be surprised and unprepared when they’re told termination pay for wrongful dismissal is owed.

Purpose and Effect of Probation Periods

The reason for probationary periods in employment contracts is to provide a safeguard to employers. It allows an employer a period of time to assess a new hire on their suitability for the role. This benefits employees to the extent that an employer may be more willing to take a chance on an employee they are not certain about, if they have a period of time to change their mind without consequence.

The Ontario Employment Standards Act (“ESA“) does not define probation or probationary period. Instead, it allows an employer to terminate an employee without cause in the first three months of employment, without notice or pay in lieu of notice. It frequently doesn’t matter, therefore, for the purposes of the Employment Standards Act whether an employment contract contains a probationary clause (although it is important that the probationary clause does not provide for less notice than the minimums required under the ESA). If an employee is employed less than 3 months, under the ESA, he or she gets no ESA notice. If an employee is employed 3 months or more they are entitled to ESA notice. The existence, or lack thereof, of a probationary clause doesn’t change this.

The true purpose of a probationary period in an employment contract is to rebut the common law rule that employees are entitled to reasonable notice.

It may come as a surprise to some that even if you’ve been employed for a single day (or even if you haven’t started yet), the Courts have declared that terminated employees are entitled to some form of notice or pay-in-lieu of notice. In fact, recent trends in case law, suggest that short term employees (people employed only a few months) may be entitled to even more notice. A properly drafted and enforceable probationary clause may rebut this presumption and disentitle employees on probation to notice.

Termination within Probation Periods

In order for an employee to be subject to a probationary clause it generally must be:

  1. expressed (in writing) – the courts will not imply the existence of a probation period;
  2. it must be neither vague or ambiguous; and
  3. it must not provide for less notice than the minimums set out in the ESA

Further, and most critically, in order for an employer to be relieved from paying reasonable notice to the terminated probationary employee, it must act in good faith. This means that it must have provided the employee with a fair opportunity to demonstrate their suitability for the role and acted fairly in determining that the employee was unsuitable for the role.

Suitability

Defining “suitability” can be challenging. The Courts recognise that assessments of probationary employees involve the consideration of factors that are intangible and subjective. As a result, they often extend wide discretion to employers. Overall, the grounds used to establish unsuitability must be reasonable and must demonstrate that employees are given a fair chance to meet the requirements of the job.

Example of factors that may be taken into consideration to determine suitability of a probationary employee are as follows:

  • Performance
  • Attitude and compatibility
  • Capability and skill
  • Capacity to meet future production requirements

Clear and Unambiguous

Courts pay strict attention to the wording and language of any probationary periods. They must be clear and unambiguous. The court will not likely imply a probationary clause from the contract term “employee performance will be reviewed after three months”. However, in at least one case, the Ontario Court of Appeal concluded that the clause “Probation… six months” was enforceable and that the word “probation” in that case had a clear and unambiguous meaning that the employer could rely on to limit the employee’s notice. See for example: Nagribianko v. Select Wine Merchants Ltd., 2017 ONCA 540 (CanLII)

Best Practices for Employers

Best practice is for an employer to take steps to document the specific actions taken to determine suitability or unsuitability. Employers should:

  • Communicate the expected reasonable standards;
  • Inform the employee of any deficiencies as they arise;
  • Explain that any failure to address and try to improve deficiencies will result in termination of employment at the end of the probation period; and
  • Provide the employee with a chance to show that they tried to improve.

The important thing for employers to do, is to honestly treat the probationary period as a time for evaluation and training. The employer should work with the employees on a regular basis to determine if they can be transitioned into the role successfully. Actions taken to carefully assess, advise and remedy performance issues should be evident. Any decision about dismissal should not be made at the last moment, give regular performance review so that a decision to terminate prior to the end of the probationary period isn’t a surprise to anyone.

If you are interested in learning how to update your employment contracts to include a probation period, take a look at my article “How to Change Employment Contracts” or feel free to contact me.

Tips for Employees

Anyone terminated from their employment, whether within a probationary period or otherwise, should seek legal advice. 


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.

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.

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.

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.

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.