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5 Steps to Follow After Being Fired

Being fired is a terrible emotional blow and it can often be very difficult to move on. So much of who we are as individuals arises from the jobs we hold; so much of how we define ourselves is based on “what we do” for a living.  It is not surprising that getting fired is often described as one of life’s most stressful and devastating events.

Because it is quite easy to become overwhelmed, I wanted to share my advice on how to best respond to getting fired and moving on in a positive and rewarding manner. Read more

Entitlements to Unvested Stock Options After Termination

Where stock options or restricted share units (RSUs) form a large part of an employee’s compensation, the question of whether that compensation should continue over the reasonable notice period becomes increasingly important. This article aims to answer that question by explaining the key factors the Ontario Courts consider in interpreting stock option plans and deciding whether a wrongfully dismissed employee should be compensated for those lost Unvested Stock Options.

Many employers draft stock options plans with the intention of excluding terminated employees from unvested stock options. However, the starting position, under the law in Ontario, is that dismissed employees are entitled to all the wages, benefits and other forms of compensation he or she would have received had they been working through their reasonable notice period.

Limiting Entitlement to Stock Options and RSUs during the Notice Period

Similar to how companies may limit the length of reasonable notice, or the entitlement to bonuses, during the notice period, employers can, with properly drafted policies, limit an employees entitlements to stock options or RSUs during the termination notice period.

15 years ago, it used to be a lot easier for employers to limit employees’ entitlements to stock options over the notice period. For example, in a 2004 decision of Kieran v. Ingram Micro Inc., the Court denied an employee’s claim for stock option entitlements during the notice period because the employment agreement restricted these entitlements upon termination “for any reason”. The Court concluded this language sufficiently incorporated the employee’s without cause termination.

However, more recently, since at least the Courts decision of Paquette v TeraGo, the law in Ontario holds that employees are entitled to payments unless the language limiting the employee’s rights on termination expressly excluded payment of bonuses upon an employee’s termination without cause. Specifically, in that case, the Court determined that a term that required “active employment” when the bonus is paid, without more, was insufficient to deprive an employee of a claim for compensation for the bonus he or she would have received during the notice period. While this case dealt with bonuses, not stock options, the principles are the same for both.

Read my earlier article for more information on Entitlements to Bonuses after Termination.

Stock option limitations must be clear and unambiguous.

In a recent case, O’Reilly v Imax Corporation, the Court of Appeal for Ontario confirmed that the employer is obliged to pay, among other things, damages to the employee for the loss of unvested stock options unless there is express language in an employment contract or stock option plan or similar document, limiting an employee’s right to compensation for other forms of compensation such as Restricted Share Units, Stock Options during the reasonable notice period.

Whether such “express language in an employment contract or stock option plan” exists is often subject to serious scrutiny in the Courts. Entitlements to stock options at termination but only if the language is clear and unambiguous. The enforceability of these agreements depends on the particular circumstances of each case.

Stock option limitations must be drawn to the attention of the employee.

Battiston v. Microsoft Canada Inc highlights that having a well-drafted and legally compliant contractual provision may not be sufficient. In this case, the employee was awarded damages for the stock options that were scheduled to vest during the notice period because the employer failed to bring the limitations in the stock option plan after termination to the employee’s attention at the time he accepted the terms and conditions of the stock awards.

The Court considered the termination provisions in the Stock Award Agreements as “harsh and oppressive” since they barred Mr. Battiston’s right to have unvested stock awards vest if he had been terminated without cause. As a result, the court ruled “reasonable measures must be taken to draw harsh and oppressive terms to the attention of the employee.”

So, in addition to clear and unambiguous language in agreement terms, the Courts hold that any harsh or negatively restrictive conditions contained within those documents must be explicitly communicated to the employee.

Conclusions

In summary, Canadian courts have made it clear that unless companies are extremely careful in the wording of stock option plans, these plans will be interpreted to allow employees dismissed without cause to accumulate and exercise their stock options until the end of the reasonable notice period. To avoid this outcome employers must make sure to use wording in the stock option plan that limits an employee’s right to exercise options after a certain point in time. In situations where careful and clear wording does not exist or where such limitations are not brought to the employee’s attention, Courts will interpret stock option plans against the employer and the trigger date for the termination of the options will not commence until the end of the reasonable notice period.


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 EMS, Healthcare Workers and Health Professionals

If you work in emergency medical services (EMS), healthcare or are otherwise a health professional, then there are special exceptions and rules that govern the minimum standards of employment for you in Ontario.

Who Do these Special Exceptions Apply to?

 

  • Ambulance drivers and driver’s helper or first-aid attendant on an ambulance
  • Audiologists
  • Chiropodists and chiropody students
  • Chiropractors and chiropractic students
  • Dental Hygienists
  • Dental technologists
  • Dentists and dentistry students
  • Denturists
  • Dieticians
  • Firefighters
  • Hospital employees
  • Massage therapists and massage therapy students
  • Medical laboratory technologists
  • Medical radiation technologists
  • Midwives
  • Naturopaths and naturopathy students
  • Nurses
  • Occupational therapists
  • Opticians
  • Optometrists and optometry students
  • Paramedics and emergency medical attendants
  • Pharmacists and pharmacy students
  • Physicians, surgeons and medical students
  • Physiotherapists and physiotherapy students
  • Psychologists and psychology students
  • Residential care workers
  • Respiratory therapists
  • Speech-language pathologists
  • Veterinarians and veterinary students

 

What are the Special Exceptions?

 

Occupational Group

Special Rule/Exemption

Ambulance drivers and driver’s helper or first-aid attendant on an ambulance

You are not entitled to overtime pay.

Audiologists

Dental Hygienists

Dental technologists

Midwives

Opticians

Speech-language pathologists

You are not entitled to sick leave, family responsibility leave or bereavement leave if taking the leave would be professional misconduct or abandoning your duty

 

Chiropodists and chiropody students

Chiropractors and chiropractic students

Dentists and dentistry students

Denturists

Dieticians

Massage therapists and massage therapy students

Naturopaths and naturopathy students

Optometrists and optometry students

Pharmacists and pharmacy students

Physicians, surgeons and medical students

Physiotherapists and physiotherapy students

Psychologists and psychology students

Veterinarians and veterinary students

You are not entitled to:

  • Minimum wage
  • Eating periods
  • Overtime pay
  • Sick leave, family responsibility leave or bereavement leave if taking the leave would be professional misconduct or abandoning your duty
  • Public holidays or public holiday pay
  • Vacation with pay
  • Daily and weekly limits on hours of work
  • Daily rest period
  • Time off between shifts
  • Weekly/bi-weekly rest periods
  • Daily rest period

Firefighters

You are not entitled to:

  • Daily and weekly limits on hours of work
  • Daily rest periods
  • Time off between shifts
  • Weekly/bi-weekly rest periods
  • Overtime pay
  • Public holidays or public holiday pay

Hospital Employees

If you work in a hospital, long-term care home or health care facilities:

  • You may be required to work on a public holiday if the public holiday is normally a working day for them and you are not on vacation.
  • If required to work on a public holiday, your employer may either:
    • Pay you at your regular rate for the hours you work on the public holiday and provide you with a substitute day off work with public holiday pay or
    • Pay you public holiday pay plus premium pay for the hours you work on the public holiday.

Medical Laboratory Technologists

Medical Radiation Technologists

Nurses

Respiratory Therapists

You may not be entitled to sick leave, family responsibility leave or bereavement leave if taking the leave would be professional misconduct or abandoning your duty.

If you work in a hospital, you may be required to work on a public holiday if the public holiday is normally a working day for you and you are not on vacation.

If you are required to work on a public holiday, your employer may either:

  • Pay you at their regular rate for the hours they work on the public holiday and provide you with a substitute day off work with public holiday pay or
  • Pay you public holiday pay plus premium pay for the hours you work on the public holiday.

Paramedics and Emergency Medical Attendants

If you are a paramedic or emergency medical attendant in the land and air ambulance industry and are represented by a union:

  • You are not entitled to overtime pay.
  • Your employer and union may agree in writing that:
    • The general rest period rule does not apply and they are entitled to eight consecutive hours free from work each day
    • The general eating period rule does not apply and they are entitled to a different eating period set out in the written agreement

Residential Care Workers

If you work supervising and caring for children or persons with developmental disabilities in family-type residential homes and they live in the home during work periods, they are entitled to:

  • Public holidays
  • Vacation with pay
  • Notice of termination/termination pay
  • Severance

You are not entitled to:

  • Daily or weekly limits on hours of work
  • Daily rest periods
  • Time off between shifts
  • Eating periods
  • Overtime pay
  • Be paid for time you spend at the workplace eating, sleeping, resting or attending to your own affairs, even if you are on call during that time
  • The general minimum wage rate: instead, you are entitled to a regular rate of pay that equals at least the minimum wage rate for the lesser of the number of actual hours worked or 12 hours
  • The general weekly/bi-weekly rest period: instead, you are entitled to at least 36 hours free from work each week

You may be entitled to up to 15 hours of pay per day if you worked more than 12 hours in a day and you:

  • Have accurate records of the hours you worked
  • Provide those records to your employer immediately after the pay day for the period in which the extra hours were worked, and before the next pay period

You may agree to take multiple rest periods instead of one rest period of 36 consecutive hours. If you agree to work during your rest period(s), your employer must:

  • Pay you at least one and one-half times your regular rate of pay for the hours you work, or
  • Add the hours you work to one of their next eight 36 hour rest periods.

 


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.

Discrimination during the Job Interview and Hiring Process

Discrimination in the course of a job interview or in the making of hiring decisions remains too common across Ontario. While the job interview is an opportunity for both employers and job seekers to learn about each other and to determine suitability or fit for the job at hand, attempts by an employer to solicit information that relate to the “protected grounds” (i.e. race, age, sex, gender, identity etc.) under the Ontario Human Rights Code is generally off limits.

Ontario workers are protected from discrimination even at the pre-hiring, interview or application stage of employment. It is important, therefore, for both employees and employers to understand what questions are appropriate and which are not.

This article will review some of guidelines around pre-employment screening during the interviewing and hiring process.

Job Interview Guidelines

Issues of human rights and discrimination need to be addressed by an employer in advance of the job hiring process. Hiring managers and human resources staff need to be provided with training and education to identify and eliminate discrimination in the workplace. The hiring process must be fair.

Best practices for employers in the course of job interviews include:

  1. Have a multi-person panel conduct formal interviews and have the panel reflect the diversity available in the organization.
  2. Develop a set of interview questions in advance and ask all applicants the same questions.
  3. Base the questions on the job’s essential duties and “bona fide” requirements.
  4. Make sure that any questions asked comply with the Human Rights Code and avoid questions requesting “sensitive information” unless necessary.
  5. Create an answer guide showing desired answers, along with a marking scheme, and have each panel member independently record and score each candidate.

Employers should avoid making hiring decisions based on informal or subjective assessments by the interviews because these “feelings” of suitability are more likely to lead to subconscious biased hiring decisions.

Requesting Sensitive Information in the Job Interview Process

Sometimes information, that could be seen to be related to a ground of discrimination under the Human Rights Code, is necessary because of the specific requirements of a job. Where this is the case, the Ontario Human Rights Commission recommends only requesting that information after an offer of employment is made that is conditional on the employee meeting the bona fide occupational requirements.

Types of information that is considered sensitive include:

  • Driver’s licence
  • Birth certificate
  • Work authorization issued by Immigration Canada
  • Educational or professional credentials
  • Social Insurance Number
  • Information about health or age necessary for pension, disability, superannuation, life insurance and benefit plans
  • Police record checks
  • Drug and Alcohol Testing
  • Psychological testing, if legitimately required for assessing ability to do the job
  • Next-of-kin or person to be notified in case of emergency
  • Insurance beneficiary
  • Accommodation needs

These documents and information are sensitive because they often reveal a person’s age, sex, gender, place of origin, date of arrival in Canada, residency status, gender identity, family status, marital status, sexual orientation or disability.

For example, considering hiring a truck driver. While they need to have a valid driver’s license, an employer should avoid asking to see their driver’s license until after a conditional offer of employment is made to avoid any claim of discrimination related to their gender identity, age or disability.

What is a Bona Fide Occupational Requirement?

As I have described briefly in my earlier article on Age Discrimination and Forced Retirement, the Courts consider a two-part test for determining whether a bona fide occupational requirement exists:

  1. The employer must establish that the retirement was imposed honestly, in good faith, and in the belief that the requirement is rationally connected to the performance of the job, and not for some ulterior motive; and
  2. The employer must establish that the job requirement is reasonably necessary to assure the efficient and economical performance of the job without endangering the employee, his fellow employees and the general public.

Any bona fide occupational requirement must be inclusive and must accommodate individual difference up to the point of undue hardship. It is important that each person be assessed against their own personal abilities instead of being judged against group characteristics.

Drug and Alcohol Testing and Discrimination during the Job Interview and Hiring Process

It is discrimination on the basis of disability to require job applicants to take a drug or alcohol test as a part of an application or interview screening process unless the employer can satisfy the Bona Fide Occupational Requirement (BFOR) test. Whether a drug or alcohol test is a BFOR is often the source of human rights litigation.

An excellent example of how a Human Rights Tribunal wrestles with this problem can be seen in the case of Dennis v Eskasoni Band Council, 2008 CHRT 38. In this case Dennis argued that the employers drug and alcohol testing discriminated against people with alcohol addiction and dependency. The employer argued that the testing was necessary to ensure the safety of its workers.

The Test followed by the Tribunal was as follows:

  1. Does the practice appear discriminatory?
  2. Has the Employer Established it to be a BFOR?

In terms of the first part of the test, the Tribunal held as follows:

[66] A drug testing policy that has the effect of depriving these individuals, who fall within the protected class of disabled persons, of employment opportunities, is thus prima facie discriminatory

It then went on to consider:

  1. Did the employer adopt its policy for a purpose rationally connected to the job being performed?
  2. Did the employer adopt the testing in good faith?
  3. Is the testing reasonably necessary to the accomplishment of the purpose or goal of safety in the workplace, including:
    • Is alcohol impairment a safety hazard?
    • Is the drug and alcohol screening an effective means to detect the presence of a hazard in the workplace?

Ultimately, the Tribunal concluded that the employer’s drug and alcohol testing policy was reasonably necessary for the accomplishment of the employer’s goals of protecting its employees from injury and its property from damage.

Criminal Background Checks and Discrimination during the Job Interview and Hiring Process

The Human Rights Code prohibits discrimiantion on the basis of “record of offences”. Further, crimnal background checks can uncover information about a candidate’s age, citizenship and other “protected grounds”. Therefore, like drug and alcohol testing, it is discrimination to require job applicants to subject to a criminal background check as a part of an application or interview screening process unless the employer can establish that it is requires as a Bona Fide Occupational Requirement (BFOR).

If an employer wants to conduct a criminal background check, they have to first establish that there is a valid occupational reason to do so. The job application and/or conditional offer must clearly specify the check is necessary as part of the position. Written consent is a required.

Any type of background check should be conducted in good faith. An employer should gather as much information as possible before hiring a candidate and be reasonable about the relevance of the information gathered as it relates to the candidate’s ability to perform the job.


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.

 

Understanding Restrictive Covenants: Non-Solicitation and Non-Compete

Non-solicitation and non-competition clauses are used to protect employers from losing customers or business as a result of a departing employee.

Over the course of their employment, employees may acquire specialized knowledge of a company’s trade secrets, expertise or other unique proprietary information about their employers. In many cases, particularly in sales, employees establish and maintain successful and close relationships with customers or clients. While these are positive elements of an employment relationship, when an employee changes jobs, the company intelligence they take with them and their subsisting relationship with company clients, can pose issues for employers.

As a result, employers often look for ways to protect their business interests, customer bases and other threats of competition. One way employers can do this is by imposing restrictive covenants on their employees in their employment contracts.

In this article, I will explain two of the most common restrictive covenants: non-solicitation and non-competition.

What are Restrictive Covenants?

Restrictive covenants are employment contract clauses that restrict, limit or prevent an employee from doing certain things following the end of their employment. Most often, these come in the form of a “non-solicitation” clause and/or a “non-competition” clause in the employment contract.

Non-Competition vs Non-Solicitation

The purpose of a non-competition clause is to limit a former employee’s ability to work for a competitor or open a competing business. These are generally only upheld in exceptional cases.

A non-solicitation clause prevents or limits an employee from “soliciting” clients (and often employees) of their former employer.

Soliciting has a very specific meaning. In the simplest of terms, it occurs when a person contacts a former customer or business contact, and asks them to keep giving them business at their new company. For example: a LinkedIn post about your change in role, wouldn’t count as soliciting, but sending a direct message, saying “Hey, I’ve moving to new company. Do you want to try out some of our products” probably would be.

The Court of Appeal in HJ Staebler Co v. Allan2008 ONCA 576, explains the difference between a non-solicitation clause and a non-competition clause as follows:

…A restrictive covenant may restrain either competition or solicitation. A noncompetition clause restrains the departing employee from conducting business with former clients and customers whereas a non-solicitation clause merely prohibits the departing employee from soliciting their business.

Whether a Restrictive Covenant is a Non-Competition or Non-Solicitation is Not Always Clear

In Donaldson Travel Inc. v. Murphy, 2016 ONCA 649, the parties had a dispute over whether a certain restrictive covenant was an enforceable non-solicitation clause or an unenforceable non-competition clause. The clause stated:

In the event of termination or resignation [the employee] will not solicit or accept business from any corporate accounts or customers [of the employer]

The Ontario Court of Appeal founded that the words “accept business” meant that the clause went beyond a mere non-solicitation agreement and was, therefore, unenforceable.

Enforcing Restrictive Covenants

Generally, Courts hesitate to uphold restrictive covenants on the basis that these types of clauses are often considered impediments to basic elements and principles of a healthy economy. Courts don’t like preventing people from using their skills, experiences and relationships with their next employer unless absolutely necessary.

Courts Prefer Non-Solicitation Clauses

In Lyons v Multari [2000] OJ No. 3462, the Ontario Court of Appeal reasoned that:

Generally speaking, the Courts will not enforce a non-competition clause if a non-solicitation clause would adequately protect an employer’s interests

Courts are more strict towards and less likely to enforce non-compete agreements because they limit an individual’s ability to earn a living or pursue a job for which they are qualified. Non-solicitation clauses, on the other hand, don’t go so far as totally limiting an individual from working in a certain industry all together, and therefore, are less restrictive and more likely to be enforceable.

The Legal Test: Reasonable and Necessary to Protect a Legitimate Interest

To be enforceable, both non-competition and non-solicitation clauses need to be reasonable to and necessary to protect a legitimate business interest. In addition, the language of the restrictive covenant must be clear and reasonable in terms of:

  1. It’s geographic scope;
  2. The length of time it is valid; and,
  3. The type of activities that it limits

If a restrictive covenant is ambiguous or excessive with regard to time, activity, or geography, it will probably be found to be unreasonable and unenforceable.

For example, consider a Life Insurance Salesman working for a brokerage in the High Park area of Toronto. If a non-solicitation clause limited him from soliciting clients anywhere in Ontario, that might be an unreasonably large geographical area. A clause limited in scope to only to the City of Toronto is more reasonable and more likely to be enforceable.

Implied Duty Not to Solicit

Without an explicit non-solicitation agreement, ordinary employees are free to contact customers and clients of their former employers for the purpose of soliciting their business. However, senior executives, directors, officers and other key members of a business may have “fiduciary” duties, which survive the end of the employment relationship, which may include a common law duty to not solicit customers for a reasonable time period after termination of employment.

Senior executives owe fiduciary duties to their employer because the employer has placed significant trust in them to exercise discretion in the best interests of that employer or where the employer is particularly vulnerable to the executive.

Canadian courts consider fiduciary duty in a broad and flexible manner to respond to the facts of each particular case.

Key Points to Take Away

  • Employers should consider what restrictions are appropriate on an employee by employee basis.
  • Restrictive Covenants should be as minimal as possible while still maintaining protection of the employer’s proprietary interests.
  • Courts are reluctant to enforce non-compete restrictive covenants as they are seen to obstruct basic economic activities including preventing individuals from working positively and achieving career aspirations. Hence, employers should consider omitting non-competition clauses when a non-solicitation clause would be adequate to protect their proprietary interests.
  • Non-solicitation clauses should identify which customers the employee cannot solicit.
  • Courts pay significant attention to the language of restrictive covenants and decisions to enforce are based on whether they are clear, specific and narrow in scope.
  • Employers should use plain and unambiguous language in their restrictive covenants.

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.

All Ontario Employers Need New Employment Contracts: Court of Appeal

Due to a very disruptive decision released by the Ontario Court of Appeal last week in Waksdale v Swegon North America Inc., 2020 ONCA 391, your employment contract is probably no longer enforceable.

Waksdale v Swegon North America Inc.

Waksdale v Swegon North America Inc. was a wrongful dismissal action by employee Benjamin Waksdale against his former employer Swegon North America Inc. Mr. Waksdale was terminated without cause after working only 8 months. He sued for 6 months pay in lieu of reasonable notice.

The plaintiff’s employment contract had the following “Termination Without Cause” provision:

You agree that in the event that your employment is terminated without cause, you shall receive one week notice or pay in lieu of such notice in addition to the minimum notice or pay in lieu of such notice and statutory severance pay as may be required under the Employment Standards Act 2000 as amended. All reimbursement for business expenses shall cease as of the date of termination of your employment, however, you shall be reimbursed for legitimate business expenses that have been incurred and submitted to the Company but not as yet paid you to that date. The terms of this section shall continue to apply notwithstanding any changes hereafter to the terms of your employment, including, but not limited to, your job title, duties and responsibilities, reporting structure, responsibilities, compensation or benefits.

The employment contract also had a “Termination for Cause” provision. It was conceded by the employer that the wording of this Termination for Cause provision breached the terms of the Employment Standards Act, 2000 (“ESA”) and was therefore void and unenforceable. In what is probably the most problematic portion of this decision, neither the Ontario Superior Court nor the Ontario Court of Appeal set out the wording of the Termination for Cause provision. Accordingly, we are all left to guess at what made it unenforceable.

At trial, the lawyer for Mr. Waksdale argued that the employment contract (or at the very least both of its termination provisions) was not enforceable because the Termination for Cause provision was void.

The Ontario Court of Appeal agreed and held as follows:

An employment agreement must be interpreted as a whole and not on a piecemeal basis. The correct analytical approach is to determine whether the termination provisions in an employment agreement read as a whole violate the ESA. Recognizing the power imbalance between employees and employers, as well as the remedial protections offered by the ESA, courts should focus on whether the employer has, in restricting an employee’s common law rights on termination, violated the employee’s ESA rights. While courts will permit an employer to enforce a rights-restricting contract, they will not enforce termination provisions that are in whole or in part illegal. In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked.

What Makes a Termination for Cause Provision Void and Unenforceable?

As I have previously written about in my article “Termination of the Employment Relationship in Ontario”, where an employer has “just cause” for termination they can fire an employee without paying reasonable notice at common law (subject to the principles of Progressive Discipline).

Examples of “Just Cause” at common law include:

  • Repeated breaches of company policy
  • Repeated Truancy
  • Violence or Harassment
  • Dishonesty
  • Insubordination

When terminating for just cause, however, employers are still required to pay ESA Notice and Severance unless that employee “has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”.

Unless your employment contract explicitly carves out a distinction between termination for Just Cause and termination for “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”, it may be void and unenforceable, as was found by the Court of Appeal in the Waksdale decision. As a result, your employment contract’s “Termination Without Cause” provision might also be found unenforceable.

Employment Contracts Post-Waksdale

The existence of the Waksdale decision is a serious liability for Ontario employers. Previously, little attention had been paid to the enforceability of the “Just Cause” provisions. From now on, that will no longer be the case. In my experience, very few employment contracts that come across my desk draw the distinction between Just Cause and “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”.

As a result, the majority of employment contracts in Ontario need to be amended and updated. Otherwise, employers risk their termination provisions being unenforceable, which means they will owe employees common law reasonable notice. Common law reasonable notice often works out to months or years of notice rather than weeks under the ESA.

Waksdale Raises More Questions

While the Ontario Court of Appeal has made up its mind on the effect of poorly drafted Without Cause provisions, the Waksdale decision raises other important questions concerning employment contract more generally: if other terms of an employment contract breach the ESA, what is the effect on the enforceability of the termination provisions? For example, what if your employment contract provides for less than the minimum vacation entitlements, does that invalidate your termination provision?

This is a problem because, in Waksdale, the Court of Appeal stated “the correct analytical approach is to determine whether the termination provisions in an employment agreement read as a whole violate the ESA”. The Court also explained that “an employment agreement must be interpreted as a whole and not on a piecemeal basis”.

Whatever the answer to that question is, there is no doubt that employees now have another arrow in their quiver when challenging employment contracts— and employers face yet another risk when terminating an employee.

Employers Need New Employment Contracts

In conclusion, employers need to update their employment contracts. Doing so is inexpensive and pays substantial dividends at termination time. As noted, the difference in notice period, for an employee with an enforceable termination provision versus one without, can be months or years of pay.

If you are interested in learning how to implement new or update employment contracts, read my article, How to Change Employment Contracts.


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.

Punitive Damages in Employment Law

An employer is obligated to act fairly and in good faith towards their employees. If an employer treats an employee maliciously, or intentionally breaks the law, Courts can punish that employer by awarding the employee what is called “punitive damages”.

In this article we will set out some of the circumstances under which punitive damages are awarded, the kinds of behaviour that warrant punitive damages, and how the courts determine whether punitive damages are appropriate.

What are Punitive Damages?

The Supreme Court of Canada defines the characteristics of punitive damage as follows:

Punitive damages may be awarded in situations where the [employer’s] misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency… It is the means by which the judge expresses outrage at the egregious conduct of the [employer].

When are Punitive Damages Awarded?

Punitive damages are rarely awarded and when they are, it is only after careful and cautious consideration by the Court. Factors that the Court considers are meant to test how serious and egregious the employer’s conduct was.

For example:

  • Was the employer’s misconduct planned and deliberate?
  • Did it occur over a long period of time?
  • Did the employer try to hide, lie about, or cover up the misconduct?
  • Was there some ulterior inappropriate motive behind the misconduct, such as intimidation, an intent to harm the employee, or to otherwise extract some unfair unjust advantage?

What kinds of bad behaviour warrant punitive damages?

While there is no strict all inclusive list of misconduct that leads to awards of punitive damages, Courts have awarded punitive damages in a number of cases, including, where:

  1. an Employer terminates for just cause based on knowingly false or unsupportable allegations;
  2. an Employee is treated in a demeaning and/or humiliating manner;
  3. an Employer demands that an employee resign before it will provide a reference letter;
  4. an Employer threatens, extorts or intimidates an employee;
  5. an Employer intentionally lies to or misleads an employee; or
  6. an Employer intentionally violates the Employment Standards Act, 2000: see Altman v. Steve’s Music, 2011 ONSC 1480 (CanLII).

The Legal Test for Punitive Damages in the Employment Law Context

The Ontario Court of Appeal in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (CanLII), summarizes the legal test that the Ontario Court follows in deciding to award punitive damages, as follows:

  1. The defendant’s conduct is reprehensible.
  2. The defendant committed an “actionable wrong” independent of the underlying claim for damages for breach of contract; and
  3. A punitive damages award, when added to any compensatory award, is rationally required to punish the defendant and meets the objectives of retribution, deterrence and denunciation.

There have been a number of court cases that have ruled on each of the above three factors. Let’s take a deeper review of some of the defining principles of law that have emerged.

1. Reprehensible Conduct

Reprehensible conduct has been explained in a couple of cases, as follows:

  • In Vorvis v. Insurance Corp. of British Columbia, [1989] 1 SCR 1085, the Supreme Court of Canada observed that conduct meriting punitive damages awards must be:

“harsh, vindictive, reprehensible and malicious”, as well as “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment”.

… the impugned conduct must depart markedly from ordinary standards of decency—the exceptional case that can be described as malicious, oppressive or high-handed and that offends the court’s sense of decency

The test … limits [a punitive damages] award to misconduct that represents a marked departure from ordinary standards of decent behaviour. Because their objective is to punish the defendant rather than compensate a plaintiff (whose just compensation will already have been assessed), punitive damages straddle the frontier between civil law (compensation) and criminal law (punishment).

[P]unitive damages should be resorted to only in exceptional cases and with restraint.

2. Committed an Actionable Wrong

The law does not permit individuals to be punished simply because they do something that a Judge or the Court doesn’t like or approve of. The legal system isn’t there to punish unethical behaviour, only illegal behaviour. Therefore, punitive damages can only be awarded where the misconduct of the employer amounts to some wrong that could give rise to a lawsuit by itself.

In Royal Bank of Canada v. W. Got & Associates Electric Ltd. [1999] 3 SCR 408,  this Court confirmed that “the circumstances that would justify punitive damages for breach of contract in the absence of actions also constituting a tort are rare”. Rare they may be, but the clear message is that such cases do exist.  The Court has thus confirmed that punitive damages can be awarded in the absence of an accompanying tort.

Therefore, the requirement of an independent actionable wrong can be met by either an independent tort, a breach of fiduciary duty or a breach of a contractual duty such as the duty of good faith or fair dealing.

3. Rationally Required to Punish the Employer and Meets the Objectives of Retribution, Deterrence and Denunciation.

Ordinarily, a Court simply puts an employee back into the position they would have been in but for the conduct of the employer. This is called “compensatory” damages. Punitive damages are different. They are ordered on top of compensatory damages resulting in the employee getting more than he would normally be entitled to and is therefore actually in a better position as a result. Punitive damages are essentially legal recompense that a defendant found guilty of committing a wrong or offense is ordered to pay on top of compensatory damages. They are meant as punishment for behaviour that is considered abhorrent.

This principle is explained in Fidler v. Sun Life Assurance Co. of Canada, [2006] SCR 3, “[W]hile compensatory damages are awarded primarily for the purpose of compensating a plaintiff for pecuniary and non-pecuniary losses suffered as a result of a defendant’s conduct, punitive damages are designed to address the purposes of retribution, deterrence and denunciation.”

For this reason, the Courts have to consider whether an employer has been properly punished and whether a punitive damage would help achieve this objective.

Punitive Damages Are Not Available In Human Rights Tribunal Decisions

The Human Rights Tribunal does not have jurisdiction to award punitive damages.


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.

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.