The Duty to Mitigate

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

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

What is the Duty to Mitigate?

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

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

What does comparable employment mean?

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

How to Mitigate?

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

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

Re-employment with the same employer

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

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

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

Dussault v Imperial Oil Limited

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

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

Benjamin v. Cascades Canada ULC

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

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

Evans v. Teamsters Local Union No. 31

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

Re-employment with a Non-Comparable Job

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

Employment in a comparable job position

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

Conclusion

Employer tips:

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

Employee tips:

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

Contact Justin W. Anisman

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

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


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

EI: Employment Insurance Basics

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

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

Overview

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

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

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

Regular Benefit Program

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

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

Example:

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

Exceptions to the regular benefit program — Fired for cause

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

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

Some examples of misconduct include:

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

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

Disputing a claim

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

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

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

Additional Benefit Programs

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

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

 How to apply for EI benefits

The Online EI Application Process Explained:

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

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

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

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

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

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

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

How do employers process EI premiums?

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

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

How are EI claims managed?

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

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

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

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

Misrepresentation

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

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

EI Telephone Information Service

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

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


Contact Justin W. Anisman

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

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


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

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.

Employment Law for Bartenders, Waiters and Waitresses

Bartenders, waiters and waitresses, or “Liquor Servers” as they are referred to in the Employment Standards Act (“ESA”), are given special treatment under the law and by the Ontario Courts. While many of the ESA’s provisions apply equally to all types of employees, there are some important distinctions for liquor servers that hospitality employees and employers should know. This article is meant to highlight some of those important differences.

Minimum Wage

As of January 1, 2018, minimum wage for most workers in Ontario was increased to $14.00 per hour. However, the ESA permits lower minimum wage rates for certain designated groups of workers who receive tips as a significant portion of their income. Liquor servers fall into this category. Since January of 2018, the minimum wage rate for liquor servers is $12.20 per hour.

While the terms “Liquor Server” or “Bartender” are not specifically defined in the ESA, the relevant section on minimum wage provides helpful insight into whether an employee’s minimum wage rate can legally be lowered to $12.20 per hour. The ESA states as follows:

Determination of Minimum Wage
23.1 (1) The minimum wage is the following:
1. On or after January 1, 2018, but before October 1, 2020, the amount set out below for the following classes of employees:
ii. For employees who, as a regular part of their employment, serve liquor directly to customers, guests, members or patrons in premises for which a licence or permit has been issued under the Liquor Licence Act and who regularly receive tips or other gratuities from their work, $12.20 per hour. [emphasis added]

Minimum Wage After October 2020

As suggested in the above section, after October of 2020, the minimum wage rate for liquor servers will increase in accordance with a formula based on the Consumer Price Index. This formula is as follows:

Previous Wage × (Index A/Index B) = Adjusted Wage

In which:

“Previous wage” is the minimum wage rate that applied immediately before October 1st of the year;

“Index A” is the Consumer Price Index for the previous calendar year;

“Index B” is the Consumer Price Index for the calendar year immediately preceding the calendar year mentioned in the description of “Index A;” and

“Adjusted wage” is the resulting new minimum wage rate.

Termination, Reasonable Notice, and Wages

Like all employees in Ontario, liquor servers are entitled to a certain amount of notice, or pay in lieu of notice, when their employment is terminated.

That being said, for liquor servers, more often than not a significant portion of their income comes in the form of tips. Therefore, the biggest question I get as a Toronto employment lawyer, from both employees and employers, is whether tips should be included as wages for the purpose of pay in lieu of reasonable notice. The answer to that questions depends significantly on whether the bartender or liquor server has a valid employment contract that limits notice only to those minimums under the ESA.

Under the ESA, Wages Do Not Include Tips

Under the ESA, generally when an employer terminates an employee who has been continuously employed for at least 3 months, the employer must provide the employee with notice, or pay in lieu of notice. This pay in lieu of notice is often referred to as “termination pay.” The amount of written notice required by the ESA is as follows:

Employment Period Notice Length
3 months – less than 1 year 1 Week
1 year – less than 3 years 2 Weeks
3 years – less than 4 years 3 Weeks
4 years – less than 5 years 4 Weeks
5 years – less than 6 years 5 Weeks
6 years – less than 7 years 6 Weeks
7 years – less than 8 years 7 Weeks
8 years or more 8 Weeks

If an employee, by an enforceable employment contract, is only entitled to the minimums under the ESA, then that worker may NOT be owed tips. Wages under the ESA are defined as:

“Wages” means:
(a) monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied,
(b) any payment required to be made by an employer to an employee under this Act, and
(c) any allowances for room or board under an employment contract or prescribed allowances,
but does not include,
(d) tips or other gratuities,
(e) any sums paid as gifts or bonuses that are dependent on the discretion of the employer and that are not related to hours, production or efficiency,
(f) expenses and travelling allowances, or
(g) subject to subsections 60 (3) or 62 (2), employer contributions to a benefit plan and payments to which an employee is entitled from a benefit plan. [emphasis added]

Without an Enforceable Termination Clause, Tips Are Owed as Part of Termination Pay

Without an enforceable clause in an employment contract which limits reasonable notice to only the ESA minimums, the Ontario Courts ignore the strict wording of the ESA and require employers to pay tips as part of wrongful termination pay.

We can see an example of this in the case of Giacomo Violo v. Delphi Communications, Incorporated. Violo had worked as a waiter and bartender for a small restaurant in Ontario for 29 years. At the time of his termination, he was 51 years old. The parties did not have an employment contract, and the restaurant contended that Violo had been legally terminated due to excessive tardiness, alcohol abuse, and discourteous behaviour. After examining the evidence, including work records from the defendant and testimony from current employees, the Court determined that “there was no cause for the plaintiff’s dismissal.” The Court then turned to the issue of determining the reasonable notice period Violo was due. After examining numerous factors, including Violo’s age and the availability of similar jobs at the time he was terminated, the Court determined Violo was entitled to a reasonable notice period of 15 months. The Court then addressed the issue of damages, noting that tips would be factored in as such wages constituted a significant portion of his overall income: “… in 2010 he claimed $9,025 in tip income, almost as much as his income from wages.” In total, Violo was awarded $45,250, representative of his base salary and tips over the course of the 15 month notice period.

Final Thoughts

For employers, it is important to have a valid written employment contract with all bartenders, waiters, and waitresses. While the amount of notice cannot be below the minimum amount required by the ESA, employers can fashion contracts which provide for less notice than the employee would otherwise be entitled to at common law. When it comes to employees who receive customary tips, this can mean a substantial difference in the amount of termination pay. If you need assistance drafting employment contracts, we strongly recommend that you speak to an experienced employment attorney for guidance and assistance.

For terminated employees who received tips as a significant portion of their overall income, it is crucial to remember that they likely have rights under the common law that are far greater than the rights afforded to them under the ESA. It may be best for liquor servers and waitresses to sue their former employer in court for “wrongful dismissal,” seeking additional damages which would include tips. If you have been recently terminated from a position where you received tips as part of your income, we suggest that you speak to an employment attorney to help you determine the best course of action for your situation.


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.

How quickly must I sue after being fired?

The limitation period for Ontario Employment Law disputes is governed by the Limitations Act, 2002. Under the Limitations Act all wrongful dismissal claims must be brought with in 2 years of the date the claim was discovered. Discovery has a very specific meaning:

Discovery
5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

If a claim is not brought within the limitation period than in almost all circumstances the employee forever loses the opportunity to sue for wrongful dismissal or termination pay.

Limitation Period for Wrongful Dismissal Claims

In the employment law contact, the recent case of Bailey v Milo-Food & Agricultural Infrastructure & Services Inc., 2017 ONSC 1789, states:

[44] The leading case in Ontario on the commencement of the limitation period in a wrongful dismissal action is Jones v. Friedman, 2006 CanLII 580 (ON CA) (“Jones (CA)”). In that decision, the Ontario Court of Appeal held at para. 4 as follows:

A limitation period commences when the cause of action arises. In a breach of contract, the cause of action arises when the contract was breached. For the purposes of a wrongful dismissal action, the employment contract is breached when the employer dismisses the employee without reasonable notice

In ordinary circumstances this means that a wrongful termination claim is discovered on the date the employee first receives notice of termination. Not the date that the employee’s employment ended.

While there are some dissenting cases, such as the decision of Justice Pitt in Webster v Almore Trading & Manufacturing Co, 2010 ONSC 3854, it would be prudent for any lawyer or plaintiff to ensure that their wrongful dismissal lawsuits are started within two years of notice of termination.

Although there is an argument to be made that the limitation period should not start until after notice is given, you do not want to be in a position where you have to make that argument before a Judge.


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@btzlaw.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning Zibarras 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.

I’ve been fired. Does my employer have to tell me why?

In short: no.

Although it can be frustrating for employees, Ontario employers are under no obligation to give a reason after terminating an  employee. In fact, Ontario employers do not need a reason at all to end an employment relationship and, therefore, are not required to prove that the employee did something wrong to explain why they were fired. Instead, an employer simply must provide the employee with reasonable notice.

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How much notice/severance should I get after being fired?

That’s a more complicated question then all of those “online severance calculators” make it seem. Before we delve into the factors which play a role, both employees and employers need a little context and exposition on how the Ontario wrongful dismissal system works.

Overview

Firstly, you need to understand that “notice” and “severance”, though often used interchangeably in common parlance, mean different things. Under the Employment Standards Act, severance pay is defined and is an amount of money an employer needs to pay an employee on termination if certain conditions are met. In addition to severance, employers must give notice of termination to employees.

Severance Pay

An employee is only entitled to severance pay if they have been employed for 5 years or more and:

  1. the termination occurred because of a permanent discontinuance of all or part of an employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or
  2. the employer has a payroll of $2.5 million or more.

If an employee is entitled to severance pay, they are to be paid severance in a lump sum amount equivalent to one week of non-overtime wages per completed year of employment up to a maximum of 26 weeks, within 7 days of termination.

Entitlements to severance are relatively well defined. It is the notice requirements of termination that require a more nuanced analysis.

Reasonable Notice of Termination

In Ontario, employers can give notice of termination to employees in two ways. Either,

  1. An employer can give notice ahead of time; or
  2. An employer can fire an employee right away, but provide “pay in lieu of notice” equivalent to what would have been earned over the notice period.

The first step in calculating the amount of notice depends on whether that employee’s termination is subject to a valid employment contract. If the employment contract contains a  clause that sets out the amount of notice an employee gets upon being fired and the contract is valid, then the employee is entitled only to the reasonable notice set out therein.  These contracts may be invalid or void ab initio (unenforceable from the beginning) for many reasons, including if they provide for less termination entitlements than the minimums established by Employment Standards Act.

If there is no contract, or the contract is not enforceable, then an employee is entitled to what the Ontario Courts call “reasonable notice”. Reasonable notice is always more than the minimum notice. The amount of  reasonable notice depends on many factors and is calculated by the Courts after considering all of the surrounding factors. Considerations include (1) age, (2) length of service, (3) character of employment and (4) availability of similar employment. Employees are entitled to more notice if:

  • they are older;
  • they worked somewhere a very short or a very long period of time;
  • their job was very specialized and it will be difficult to find comparable employment; or
  • the employer convinced them to leave another stable job.

An employee might also be entitled to further money on termination if the employer:

  • acted badly in the manner of termination;
  • fired you for a discriminatory reason;
  • fired the employee for insisting on his/her rights under the ESA;

Contact Justin W. Anisman

To contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing, call 416-833-8443 or email him at janisman@btzlaw.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning Zibarras 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.

 

Important Upcoming Changes to the Ontario Workplace

On November 27, 2017, the Fair Workplaces, Better Jobs Act 2017 received royal assent and became Law in Ontario. Set out below are some of the most important changes to Ontario’s workplaces.

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Termination of the Employment Relationship in Ontario

Notice and Severance under the Employment Standards Act / The Minimum Standards

The Employment Standards Act, 2000 (the “ESA”) provides the minimum standards of employment with respect to, among many other things, overtime, hours of work, minimum wages, holidays, pregnancy and parental leave, and termination of employment in Ontario.

Under the ESA, employers are required to give their employees advance notice of termination in writing or, in the alternative, pay wages and continue benefits for the statutory notice period (commonly referred to as termination pay). With respect to the termination of a single employee (as opposed to mass firings or lay-offs), the minimum length of notice depends on the length of the terminated employee’s service:

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