Month: September 2019

Bill 66 is a new bill in Ontario that will have very real consequences for employees. In particular, there are changes to overtime pay and the number of hours you can work per week. If you have any questions regarding new law contact Stacey R. Ball – Employment Lawyer in Toronto today.

A bit of background

The official name of Bill 66 is the “Restoring Ontario’s Competitiveness Act, 2018”. It was introduced by the Ford government in 2018. It makes changes to the Employment Standards Act and the Labour Relations Act. The Bill passed into law in April 2019, so the changes are now in effect.

Why propose this Bill?

Bill 66 is supposed to reduce regulation for employers, by cutting red tape in various industries. The goal is to make Ontario more competitive and attractive to businesses, as the name suggests.

What are some of the changes?

48+ hour workweek under the ESA

Before Bill 66, employers and employees could agree that the employee would work more than the 48 hour work week, if the arrangement was approved by the Ministry of Labour’s Director of Employment Standards.

This requirement is gone. Employers can now enter into employment contracts with employees for 48+ workweeks.

On the one hand, it’s a positive that an employee has to agree to the arrangement for more than 48 hours/week. However, there may still be imbalances in bargaining power which make it challenging for an employee to decline. Employees may feel like they have no choice in the matter.

Averaging overtime under the ESA

Similarly to above, before Bill 66, if an employer and employee wanted to enter an agreement to average an employee’s hours over x number of weeks in order to calculate entitlement to overtime, they needed approval from the Director of Employment Standards.

Bill 66 has removed that requirement. This means that an employer and employee can enter into a valid agreement to average hours for overtime purposes if they so choose.

Removing the Employment Standards information in the workplace

Before Bill 66, employers had to display a poster in the workplace with Employment Standards information. Now, employers must only provide a copy to employees when they’re hired. The potential downside of this is that workers may not realize or remember their rights if they are not exposed to them on a regular basis.

Bill 66 could have an impact on businesses of any size as it loosens the restrictions for excess hours and overtime averaging agreements. It will also impact trade unions, construction projects and the bottom line of those projects as they look for cost-effective services. The Bill expands the list of “non-construction” employers, so they can now hire non-union contractors for certain projects, in the name of cost-efficiency. However, this may hurt trade unions in the province.

It is important to note that employees are still protected from reprisal. Reprisal, in this context, is an act of retaliation for asserting your rights under the Employment Standards Act. In theory, an employer could not punish an employee for refusing to sign an agreement for a 48+ hour week. However, it may be hard to tell exactly what is going on and therefore to prove reprisal.

What is going to happen to employees?

Only time will reveal the impact of these changes for Ontario’s working population. By reducing the regulations that employers have to follow, the Bill opens up employees to receive less overtime pay, work more hours and generally be less aware of their rights.

If you have concerns about your rights under this new law, please contact the professional employment lawyers at Ball Professional Corporation. We can help decipher the situation and make sure your remaining rights are enforced.

In the recent case Andros v Colliers Macaulay Nicolls Inc., 2019 ONCA 679, the Ontario Court of Appeal discusses entitlement to damages in relation to bonuses. Specifically, it assessed the situation in which an employee works during, or has a notice period that goes into, the time period in which a bonus is earned, but where the bonus becomes payable after the conclusion of the notice period. The decision in this case positions bonuses as being earned pro rata throughout the bonus period. Stacey Reginald Ball is an experienced employment lawyer toronto for such cases.

Example Situation

An employee is terminated in May and has a notice period that ends in November. The bonus period is from January to December and is a non-discretionary and integral part of the terminated employee’s remuneration package. Applying Andros, the terminated employee would be entitled recover a pro-rated bonus for the period of January (start of the bonus period) to November (end of notice period).

“Earning” vs. “Receiving” a Bonus

The court found that entitlement to damages in relation to a bonus is not a question of “whether the bonus would have been ‘received’ during the notice period, but whether it was ‘earned’ or ‘would have been earned’ during that period” (Andros, para 57). This is an important distinction between “earning” a bonus, by doing the relevant work, and “receiving,” or being paid, the bonus at a later date. Drawing upon the example from above, even though the notice period does not encompass the date upon which the bonus becomes payable, it does encompass a period of time in which the employee would have done work that would have earned them the bonus, or a portion of it. The court’s distinction between “earning” and “receiving” a bonus reinforces that the entitlement is not for the bonus itself, but for damages providing compensation for what the employee would have earned had the employment contract not been breached via a wrongful dismissal – it is for the lost opportunity to earn the bonus.

In Terms of “Fairness”

The court addressed the “inherent unfairness that would arise in precluding those employees terminated without cause from seeking a pro rata share of their bonuses only by virtue of the fact that the notice period ended before the bonus payment date, particularly where the bonus payment date is entirely in the discretion of the employer” (para 56). This unfairness is compounded by the fact that the employer also has the discretion to determine when to terminate an employee and could calculate to do so in a manner that distinctly benefits the employer to the detriment of the employee. For example, the employer could determine the length of the proper notice period, and determine how far in advance they would need to terminate an employee in order for that employee’s notice period to expire the week, or even the day, before the bonus period concludes. The court determined that this possible situation is untenable.

Contracting Out

It is important to note that the court agreed that it is possible for the employer to contract out the employee’s entitlement to pro-rated bonus damages if it is done clearly and unambiguously. However, there was no clarification on what the language to do so should look like.

Stacey Reginald Ball is an experienced Toronto employment lawyer with the Ball Professional Corporation. Our office handles various employment law matters, including wrongful dismissal. If you have questions regarding entitlement to pro-rated compensation for a bonus upon dismissal, please contact a lawyer for advice.

The Superior Court of Justice awarded $1.3 million to a constructively dismissed employee who was on a fixed-term contract. This was one of the largest damages awards given in Canadian employment law. In cases like these only experienced employment lawyer like Stacey Ball can help.

Grant McGuinty (plaintiff) was the owner of a successful funeral home that he sold to the Defendant corporation after a down-turn in the economy. The share purchase agreement contained a term requiring the Plaintiff to enter into a Transitional Consulting Services Agreement (“TCSA”) whereby the Plaintiff would provide consulting services to the Defendant company for ten years. The duties of the Plaintiff were the general management of the funeral home and he was identified as a “key employee” in the TCSA. There was no termination provision in the TCSA and following certain actions of the defendant, Grant commenced a constructively dismissal lawsuit. The actions that led to the claim constituted the following:

(a) Grants vehicle was taken away

(b) His desk was removed to the basement

(c) Grants commissions of 65% were not paid to him as part of the TCSA

(d) Grants hours of work began to be tracked by a subordinate employee, whom Grant supervised and without notice to him

(e) The locks were changed without notice to Grant

Ultimately, the cumulative effect of the above conduct led the court to conclude that the test for constructive dismissal had been satisfied and that a reasonable person in the Plaintiffs position would conclude that the Defendant no longer had intentions to be bound by the employment contract. Given the absence of a contractual provision providing fixed-term notice, a fixed term employment agreement binds employers to pay employees until the end of the term.

Grant was entitled to the benefits and compensation he would have received had the ten-year contract been honoured. While the Defendant argued that the Plaintiff had acquiesced to the alterations and that he was precluded from his claim, the Court ultimately rejected that argument and found that acquiescence requires clear acceptance of the varied terms. While acceptance may be inferred by remaining in an altered position for a significant time, the Plaintiff in the case at bar had in fact gone on medical leave, which did not constitute acquiescence.

It is important for employers to ensure that a clear early termination provision is written into their fixed-term contracts of employment. If you not, full payment for the duration of the contract will have to be awarded to the employee. For employees seeking to claim constructive dismissal, ensure that a significant duration of time has not passed in the new altered position. Be aware as to how courts construe acceptance of new terms. The above case was a clear situation of a medical leave.

Call our office at 416-721-7997 ext 222 for a Toronto employment lawyer to help you in your case.

In Andros, the Ontario Court of Appeal discussed the interpretation of a termination clause. There were discussions regarding ambiguity within the termination clause, incorporating Ontario’s Employment Standards Act (ESA) through silence, and interpreting the termination clause as a whole. Importantly, the decision in this case reinforces the principle that the entire termination clause is void if there is a portion that offends the ESA. As experienced employment lawyer Stacey Ball can help you in these situations.

General Principles of Interpreting Termination Clauses

The court mentioned a few general principles of interpreting termination clauses. First, when there is ambiguity in a termination clause, it is interpreted in favour of the employee. The minimum entitlements and obligations (including notice, payment of benefits, and severance) set out within Ontario’s Employment Standards Act (ESA) cannot be contracted out unless it is to improve upon the standard to the benefit of the employee. Finally, if there is any portion of the termination clause that violates the ESA, then the entire termination clause will be considered void (North v Metaswitch Networks Corporation, 2017 ONCA 790).

The Clause

The specific termination clause being interpreted in Andros reads as follows:

The company may terminate the employment of the Managing Director by providing the Managing Director the greater of the Managing Director’s entitlement pursuant to the Ontario Employment Standards Act or, at the Company’s sole discretion, either of the following:

a. Two (2) months working notice, in which the Managing Director will continue to perform all of his duties and his compensation and benefits will remain unchanged during the working notice period.

b. Payment in lieu of notice in the amount equivalent of two (2) months Base Salary.

The employer suggested that the reference to the ESA in the first portion of the clause worked with the phrase “greater of” to mean that the employee, even if being terminated using one of subclauses 4(a) or 4(b), would receive the ESA minimums for everything (i.e., notice, benefits, and severance) if they were greater than what were provided for in the subclauses. In other words, the unmentioned ESA aspects are incorporated into the subclauses by silence. However, the court interpreted the “or” as being exclusionary. The employee received either the ESA minimums, or one of the subclauses – not a combination. The court found that when read as a whole, the termination provision appeared to limit the minimum statutory obligations in the subclauses rather than include them. The subclauses did not incorporate the ESA through silence – the ESA minimums were isolated to the first portion of the termination clause.

Ambiguity

As previously mentioned, where there are multiple interpretations or a lack of clarity, the court will prefer the interpretation of the termination provision that favours the employee – as is the case in Andros. The court noted that the failure of the subclauses to expressly incorporate ESA entitlements means that there is a level of uncertainty and ambiguity. The reference to the ESA in the first part of the termination provision either did not apply, or did not clearly apply to the subclauses.

“Failsafe” Provisions

The court’s discussion about “failsafe” provisions in Andros (paras 28-30) highlights the importance of careful phrasing and inclusion of such provisions. Specifically, this case demonstrates how these clauses could be “stranded” in one part of the termination provision (i.e., only apply to one part of the provision), instead of “cloak[ing] the entire termination clause” (para 30).

Stacey Reginald Ball is an experienced Toronto employment lawyer with the Ball Professional Corporation. Our office handles various employment law matters, including wrongful dismissal. If you have questions regarding the interpretation of a termination provision, please contact a lawyer for advice.

Settlement privilege applies during settlement negotiations and could potentially extend to completed settlement agreements (Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37). However, including a confidentiality provision in a settlement agreement is preferable to relying on settlement provision due to the certainty and specificity that a properly formulated confidentiality provision will provide. The confidentiality provision can outline exactly what is to remain confidential, how long it is to remain confidential, and the consequences for a party’s failure to keep confidentiality. Stacey Ball at Ball Professional Corporation is experienced Toronto employment lawyer to deal with these cases.

Repayment Provision: A Forfeiture Clause or a Penalty Clause?

In Wong v The Globe and Mail Inc., 2014 ONSC 6372, the court discussed whether a repayment provision (i.e., a provision requiring a party to repay the lump sum, or a portion of the lump sum if they breach the confidentiality agreement) is a forfeiture provision or a penalty clause. The court provides a description of both clauses to clarify the distinction between the two (paras 44-45). Penalty provisions intend to compel a party to abide by the stipulations under the threat of paying money for failure to do so. A “penalty” requires proof of damages. Forfeiture provisions involve the loss of money which is held as security for the enforcement of an obligation. Peachtree II Associates – Dallas, L.P. v 857486 Ontario Ltd. (2005), 76 OR (3d) 362 (CA), suggests that courts should avoid classifying contractual clauses as penalties. Where a clause could be classified as either a penalty or a forfeiture, the court should favour classifying it as a forfeiture. Accordingly, the court found that the repayment provision in Wong was a forfeiture provision.

Subjective Understanding of the Agreement Does Not Matter

Another issue that arose in Wong was the party’s subjective understanding of the terms of settlement. The applicant argued that there was no breach because they had abided by the terms of the agreement as they understood it. However, in Dumbrell v Regional Group of Companies Inc. (2007), 85 OR (3d) 616 (CA), the court made it clear that it is the language and meaning of the words within the contract itself, not the subjective understanding or intention of the parties that determine the interpretation of the agreement.

Allusions Could be a Violation

Alluding to the terms of settlement, or to a monetary payment could be sufficient for a finding that the confidentiality agreement has been breach. While different confidentiality provisions could have varying levels of strictness, it is better to err on the side of caution when party to a confidentiality agreement. In Acadia University v Acadia University Faculty Association 2019 47957 (ON Lab Arb), a party was found to have breached the confidentiality provision by commenting that he had “left with a big grin on [his] face” – making the allusion that he had been paid significant amount of money.

Direct or Indirect Violations

It is important to note that confidentiality provisions could restrict a party from divulging information about the settlement either directly or indirectly. This means that a breach could be found even if it is someone directly party to the settlement that alludes to the terms of settlement. For example, if the spouse of a person party to the settlement agreement makes an allusion to receiving money from the settlement, then that could be considered a violation of the agreement.

Stacey Reginald Ball is an experienced Toronto employment lawyer with the Ball Professional Corporation. Our office handles various employment law matters, including wrongful dismissal, and often negotiate settlements. If you have any questions regarding settlement agreements, please consult a lawyer.

Workers in Ontario, and across Canada, can be terminated from their employment for cause. Just cause dismissal, often referred to as the ‘capital punishment’ of employment law, is the most severe form of dismissal. If cause has been established, workers can face significant disentitlements. Consequently, it is important to be aware of what protections workers have when faced with allegations of dismissal for cause. As outlined in R v Arthurs, if an employer terminates a worker for cause, they must demonstrate that the worker was:

• Guilty of serious misconduct;
• Habitually neglectful of their duty;
• Incompetent;
• Disobedient of the employer’s reasonable orders;
• Engaged in conduct incompatible with the workers’ duties; or,
• Engaged in conduct prejudicial to the employer’s business.

However, even if a worker has proven to meet any of the above criteria, dismissal itself may be too severe a response to the worker’s impugned misconduct. As outlined by the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38, dismissal is only warranted for just cause in the most severe cases. Instead, the norm is to take a proportional and contextual approach to discipline in the workplace. In other words, rather than dismissing an employee for something like incompetence or dishonesty, employers are typically required to utilize progressive discipline to temper and mitigate worker misconduct. It is only in circumstances of severe misconduct that a worker can be terminated for just cause without the employer using progressive discipline. Otherwise, if progressive discipline has been applied and the worker does not correct their behaviour, the worker might be subject to just cause dismissal.

What if Your Employer Fires you for “Just Cause”?

In Canada, the employer has the responsibility to prove there was cause to fire you. In the event you are terminated for “just cause”, your severance entitlements may be significantly limited. If you challenge the termination, the employer will have to show that your actions rose to this level. Being terminated for just cause may also lead to a denial of Employment Insurance (EI) benefits by Service Canada, emphasizing the severity of the implications.

Further, the employer either has to show just cause for the summary dismissal or else the employee will likely be considered “wrongfully dismissed”. There isn’t really a middle ground. If the court finds that you were wrongfully dismissed, then the employer will have to pay the damages to the wrongfully terminated worker that stem from that. This could be viewed as risky by most employers.

What Employee’s Conduct Can Count as “Just Cause”?

Every situation has to be analyzed on its own merits, but there are some red flags which could prompt an employer to fire someone for cause. These include an employee engaged in deliberate misconduct, such as fraud or theft, serious incompetence, insolence, and insubordination, to name a few. Let’s review several of these in a bit more detail.

Incompetence

A worker may be terminated for cause if they have shown “gross incompetence”. Again, this is a high bar for the employer to show. To be successful, they would have to show they gave the employee a chance to prove they could perform in their job and a reasonable opportunity to remedy the alleged incompetence. Basically, an employer has to tell the worker that their job is at risk and give them a chance to fix the problem. Additionally, the employer must demonstrate that the employee’s conduct was deliberate and intentional to establish just cause for dismissal due to incompetence.

Insolence

Insolence typically means derisive, contemptuous or abusive language, generally directed at a superior. It needs to be quite serious to warrant dismissal. The courts will use a contextual approach to determine whether the employment relationship has been damaged, such that it would be inconsistent to continue the relationship.

If the behaviour is so extreme that it interferes with and prejudices the safe and proper conduct of the employer’s business, courts have found that summary dismissal is justified. Insolence must rise to the level of wilful misconduct to justify summary dismissal for just cause.

Insubordination

Insubordination is an employee’s intentional refusal to obey an employer’s lawful and reasonable orders. The courts will view the entire situation to see if the order was clear, and if the employee was reasonably expected to obey it.

The employer must show that the employee willfully disobeyed an order. The order must be reasonable and unambiguous. If you didn’t follow instructions because they were unclear and vague, that may not count as insubordination.

Insubordination can lead to termination for cause if the employee willfully disobeys a clear and reasonable order. The courts may also be interested in the reason why someone obeyed an order that the employer thought was clear. Context matters and there are many factors which can play a role in determining whether acts of insubordination rise to the level of gross misconduct.

Is One Act Enough to Warrant Dismissal for Just Cause?

Generally, the answer is no. A single act of misconduct would have to be quite extreme to warrant summary dismissal. The courts are not very keen to allow this, in part because of the important role that employment has in a person’s identity. Only in the event of significant wrongdoing will courts hold that just one act of misconduct is enough to justify terminating the employment relationship with cause. For example, sexual harassment is a type of severe misconduct that can justify immediate dismissal for just cause due to its severity and intentional nature.

Progressive discipline is much more likely, where the employee receives clear warnings explaining their infraction. The Supreme Court of Canada has held that progressive discipline is necessary when dealing with employee misconduct unless the misconduct is sufficiently serious to warrant summary dismissal. The thinking is that employee misconduct can be more reasonably addressed through progressive discipline instead of immediately terminating the employment relationship. With progressive discipline, employees are given the opportunity to fix their behaviour, and if they do not change their ways, their employer may escalate to terminating them.

Condonation

While workers can be terminated for just cause, it is also possible that the alleged just cause that an employer is relying upon was actually condoned. If an employer condones certain behaviour that would otherwise warrant just cause termination, they cannot later rely upon that conduct to establish just cause. Condonation can prevent a former employer from relying on previously condoned conduct to establish just cause for termination. In Sleep Country Canada LP v. Marier, the Ontario Labour Relations Board provided a robust explanation of condonation. Citing an earlier case, the Board reinforced that condonation takes two distinct forms:

1. The first form occurs when a worker engages in misconduct with the employer’s awareness and the employer, either expressly or through inaction, indicates that it will not respond to the misconduct; and
2. The second form occurs when an employer expressly or by implication indicates in advance of the impugned conduct that it is or would be acceptable.

In both circumstances, the employer is prohibited from relying upon that misconduct to establish just cause for termination. The Board noted it would be “grossly unfair to allow the company to suddenly and without any prior warning or admonition” rely on the conduct of the worker that the employer itself had permitted and led the worker to believe was completely acceptable.

An employer’s condonation of conduct can cause various kinds of prejudices for the worker. As outlined by the Ontario Public Service Grievance Board in Stanley v. Ontario (Solicitor General), workers can be prejudiced when behaviour has been condoned by lulling the worker into a false sense of security about their employment and their behaviour. Furthermore, relying on previously condoned conduct to justify discipline or termination would be unfair. Additionally, the delay resulting from condonation prejudices the worker’s ability to defend themselves against allegations of new and previous misconduct. The Board held that to rely upon condoned behaviour would be significantly unfair and prejudicial to the worker, and consequently refused to accept condoned behaviour as warranting dismissal.

A recent case at the Ontario Superior Court also dealt with issues of condonation. In Goruk v. Greater Barrie Chamber of Commerce, the Court found that some alleged misconduct had been condoned by the employer year after year. In this case, the testimony of four previous presidents of the Chamber was considered by the Court. In so doing, the Court held that they had been sufficiently aware of the impugned misconduct and had not raised issues about it in the past. Consequently, the alleged misconduct could not now be used to establish just cause. It is clear that condonation of alleged misconduct can undermine the establishment of just cause. While just cause was ultimately established in Goruk, it was through completely separate grounds, rather than the impugned misconduct which the Court ruled was condoned by the employer. Condoned behaviour that prejudices workers cannot be used to establish just cause.

The ONCA dismissed the appeal of the Appellant (Defendant) in the case of Keenan v. Canac Kitchens, 2016 ONCA 79.

The case surrounded the dismissal of two long-term and senior employees who had been dismissed after approximately 32 years of service for Lawrence Keenan and after 25 years of service for Marilyn Keenan. On termination, no pay, notice or statutory entitlements were given to either of the Plaintiffs given that the Defendant characterized the Plaintiffs as independent contractors halfway into the employment relationship by altering their job title from “Foreman” to “Delivery and Installation Leader”, paying them on a piece work basis and making the Plaintiffs obtain their own trucks for transport.

Part way into the relationship the Defendant requires the Plaintiffs to sign an agreement in 1987 indicating that the Keenans were to devote “full-time and attention” to Canac as sub-contractors. The Plaintiffs received ROE’s, which showed they had quit their jobs with Canac, in spite of the fact that the nature of employment and their duties with Canac remained unchanged. They worked almost exclusively for Canac until worked slowed and the Plaintiffs took up part-time work with a competitor to which Canac showed no disagreement towards.

Trial Court

The main issue at trial was whether the Keenans were dependent or independent contractors. The trial judge found that the factors in McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916 applied and held the Keenans to be dependent contractors from 1987 until their termination in 2009 given their economic dependence on Canac and given the high level of exclusivity existing in the employment relationship between Canac and the Keenans. The trial judge awarded damages of $125,000 in lieu of 26 months’ notice to which Canac appealed.

Ontario Court of Appeal

The issues on appeal were whether the trial judge erred in finding the Keenans to be dependent contractors as opposed to independent and whether the trial judge erred in awarding 26 months’ notice.

Canac took issue with the timing of the determination of exclusivity. It argued that while the Keenans worked exclusively for Canac until 2006, it had worked for a competitor afterwards and thus at termination, the Keenans were not dependent contractors. The Ontario Court of Appeal (“ONCA”) rejected this argument and upheld the lower courts determination of the high degree of exclusivity making the Keenans dependent contractors.

On the second issue of reasonable notice, the ONCA maintained the original award of 26 months given the Keenans’ senior age (63 and 61), length of service (32 and 25 years) and the nature of the positions they held. Furthermore, the ONCA took into consideration the agreed statement of facts which showed that the parties had contemplated a damages calculation of up to 26 months’ notice.

For employment lawyers in Toronto dealing with issues of wrongful dismissal and independent/dependent contractor status, this decision presents a step in the right direction towards ensuring that it is substance rather than the form of the employment relationship that dictates a workers status in an organization.

An experienced employment lawyer can help you craft contracts and advise on whether the status of an independent contract may have changed to a dependent contractor. If you are seeking a consultation with a Toronto employment lawyer specialized in all matters of employment law, please call our office at 416-921-7997.