Month: May 2021

With the Covid-19 pandemic dragging on, employers have to resort to restructuring and downsizing their business operations to stay afloat in this harsh economic weather. Thus, a large number of employees are terminated and have to look for new employment. In this way, it becomes a critical issue whether the Covid-19 pandemic have an impact on the common law reasonable notice period when the terminated employees commence a proceeding against their former employers for wrongful dismissal at the court.

The recent court decision in Yee v. Hudson’s Bay Company, 2021 ONSC 387 has shed some light on this aspect. The Court ruled that if the employee’s termination occurred after the start of the Covid-19, the pandemic will serve to increase an employee’s entitlement to a longer common law notice period. 

Facts

In this case, the Plaintiff Mr. Melvin Yee was terminated by his former employer Hudson’s Bay Company (HBC) on August 28, 2019. At the time of termination, Mr. Yee was 62 years of age and had a working history with HBC for over 11 years. He was employed as Director of Product Design and Development.

The Relevant Factors

Mr. Yee’s employment contract with HBC did not contain a valid and enforceable termination provision, which entitled him to the common law reasonable notice period.

The Court fully considered the four Bardal factors in assessing Mr. Yee’s common law reasonable notice period, which are

1. Age;
2. Length of service;
3. Character of employment;
4. The availability of similar employment having regard to the experience, training and qualifications of the employee.

The Court ruled that Mr. Yee’s age and character of employment “favored a longer notice period” while his length of service was “neutral to somewhat favoring a longer period”.

With regard to the “availability of similar employment”, the Court acknowledged the decision of Paquette v. TeraGo Networks Inc., 2015 ONSC 4189 that “economic factors such as a downturn  in the economy or in a particular industry or sector of the economy that indicate that an employee may have difficulty finding another position may justify a longer notice period”. However, the Court also empathized that this reasonable notice is to be “determined by the circumstances existing at the time of termination and not by the amount of time it takes the employee to find employment”.

Decision

Mr. Yee was terminated on August 28, 2019, which is approximately seven months before the pandemic began in Ontaro. Therefore, the Court ruled that the Covid-19 pandemic was not a relevant factor in this case, as Mr. Yee’s termination occurred before the onset of the pandemic.

Based on the four Bardal factors, the Court awarded 16 months’ notice to Mr. Yee.

Key Takeways For Employers And Employees

For employers, it is advisable for them to review the employment contracts with an lawyer to see if there are valid and legally enforceable termination provisions in place, which can limit their employees’ termination and severance pay to the Employment Standards Act minimums. They also need to prove that the industry has not severely affected by the Covid-19 pandemic so that it is not difficult for the terminated employees to find alternative employment.

For employees, this case serves as a reminder of the importance to consult a lawyer after getting terminated. With the help of a lawyer, they will get to know whether the termination provisions in their employment contract are valid and enforceable and whether they are entitled to a longer common law notice period due to the Covid-19 pandemic.

If you are experiencing any issues in connection to your employment during the Covid-19, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.

In the recent decision of Czerniawski v. Corma Inc., 2021 ONSC 1514, the Ontario Superior Court of Justice ruled that a long-term employee’s one-time misconduct without any prior progressive discipline did not justify dismissal without notice.

The Court reaffirmed that a contextual approach should be used to assess whether an employee’s misconduct justifies termination without notice. It noted that the principle of proportionality should be applied where an effective balance should be achieved between the severity of the employee’s misconduct and the sanction imposed. The Court ruled that with no prior disciplinary actions, the isolated incident in this case did not warrant termination for just cause and thus awarded nineteen (19) months’ reasonable notice to this employee.

Facts

Mr. Czerniawski worked as an assembler for the Defendant for nineteen (19) years without any performance issues. Mr. Czerniawski was terminated alleged for cause when he got into a verbal dispute with a co-worker over work distribution. After refusing to leave the work premises, he was escorted off work by the police. Mr. Czerniawski was then asked not to return to the workplace until further notice by the employer and the police. However, after four days of hearing nothing from the employer, Mr. Czerniawski went to the reception of the plant to deliver a letter stating his side of story.

Without interviewing Mr. Czerniawski for his version of the incident, the employer abruptly terminated him and specified two grounds for dismissal without notice, namely a) Mr. Czerniawski was acting in a threatening matter to coworkers; b) Mr. Czerniawski was subordinate by refusing to leave the workplace and then returning to deliver the letter.

Decision

In this case, the Court fully considered the all the circumstances surrounding the dismissal and concluded that the misconduct did not justify termination without notice.

The Court followed the decision of McKinley v. BC Tel, 2001 SCC 38 and noted that “an employee’s misconduct does not inherently justify dismissal without notice unless it is ‘so grievous’ that intimates the employee’s abandonment of the intention to remain part of the employment relationship” (para 21). The Court noted that careful consideration should be given to the particular facts as well as the employee’s tenure and discipline history.

The Court analyzed the evidence submitted by both parties and found that the employee was a solid and steady worker with no prior history of discipline, threats or violence. Mr. Czerniawski was not given any opportunity to state his version of the incident during the investigation conducted by the employer. The Court relied upon a number of case law and ruled that given that Mr. Czerniawski was a conscientious employee with no prior incident of violence, progressive discipline such as a disciplinary letter or suspension would be an appropriate action that could send the message that his behaviour was unacceptable and given him a warning that a continuation could result in his dismissal.

The Court ruled that the Plaintiff’s misconduct was not so egregious to warrant a dismissal without notice. By taking into account Mr. Czerniawski’s age (54) , length of service  (19 years) and technical nature of his position, the Court awarded him nineteen (19) months with benefits for this notice period.

Takeways For Employers And Employees

Employees

This case serves as a reminder to employers that you should bear in mind the principle of progressive discipline before terminating any employees for cause. You are strongly advised to consult an employment lawyer in regard to appropriate sanctions once you are aware of the employee’s misconduct.

Employers should interview the employee and ask them to provide their versions of the incident. You should interview all relevant parties and conduct a full and fair investigation. Most importantly, you should consider give the employee a disciplinary letter or suspension before terminating them. You should only consider terminating the employee for cause when you are certain that the misconduct is egregious enough to warrant a dismissal without reasonable notice.

Employees

For employees, this case also sheds light on how to act appropriately once you are terminated alleged for cause. You should ask the employer for particulars about the alleged just cause, if the termination letter does not specify the reasons. You should also bear in mind that the just cause test is stringent. It is advisable for you to consult an employment lawyer for legal options before you sign any settlement documents.

If you are experiencing any employment law issues in regard to termination, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.

In a recent decision of Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 1455, the Ontario Superior Court ruled that pregnancy at the time of dismissal is an important factor in calculating the length of reasonable notice period and awarded five (5) months’ notice to the Plaintiff who had a short service of only four and one half (4.5) months.

Facts

Ms. Nahum was twenty-eight (28) years old and about five (5) months pregnant at the time of her termination. She had been employed as a Director of People and Culture with the Defendant for four and one half (4.5) months. Ms. Nahum made a compensation of $80,000 per annum with benefits. She was terminated without cause. Ms. Nahum mitigated her loss by actively looking for a job only two (2) months after she gave birth. She did not secure any employment at the time of the trial.

The parties agreed that there was no enforceable termination provision in Ms. Nahum’s employment contract. The Plaintiff argued that she was entitled to eight (8) months’ notice, while the Defendant argued that a two (2) month notice is generous.

Analysis

1. Bardal Factors

Employees are generally entitled to common law reasonable notice or pay in lieu when they are terminated by the employer without cause, if there is no valid or enforceable termination provisions in the employment contract that limit their entitlement to the statutory minimums.

The assessment of common law notice period is case-specific. The Court fully considered the core factors established in the case of Bardal v. Globe & Mail Ltd, 24 D.L.R. (2d) 140 (Ont. H.C.) in calculating the length of reasonable notice, namely

1. Character of the Employment;
2. Length of Service;
3. Age of Employee;
4. Availability of Similar Employment Having Regard to the Employee’s Experience, Training, and Qualifications

The Court noted that the character of Ms. Nahum’s position was that of mid-level management.

Her service with the Defendant was short. Since she was twenty-eight (28) years old at termination, it would not pose as an impediment for her to obtain similar positions. The Court also concluded that Ms. Nahum had the education and skills required for many available positions but the market was competitive.

 2. Pregnancy, an Important Factor in Measuring the Reasonable Notice Period

The Court has also considered the additional factor pregnancy in determining the length of the reasonable notice period in this fact pattern.

The Court reviewed case law on this point. It noted that in Harris v. Yorkville Sound Ltd., 2005 CanLII 46394 (Ont, S.C.), the judge did not require evidence to find that pregnancy does not enhance immediate employability. It also noted that in Ivens v. Automodular Assemblies Inc., [2002] O.J. No. 3129, 162 O.A.C. 124 (Div.Ct.), the appellate court found that pregnancy complications are a “Bardal-type” factor that should be considered in determining the length of reasonable notice.

The Court did not agree with the Defendant’s submission that it is problematic to find that pregnant people are less likely to find employment. The Court noted that an employer may have an immediate need for someone in the role, thus making it unappealing if a new employee will shortly require a lengthy leave and may not meet bona fide needs of the organization (para. 43). The Court stated that a person’s pregnancy is likely to increase the amount of time for them to find new employment and it does not need evidence to reach such conclusion. The Court emphasized that it is open to it to take judicial notice that pregnant people face additional challenges when looking for work (para 46).

However, the Court also emphasized that pregnancy does not always impede a job search. It should be assessed on a case-to-case basis. If a person’s pregnancy at the time of dismissal is reasonably likely to negatively impact their ability to find alternative employment, this should factor into the determination of the reasonable notice period.

Decision

In this fact pattern, the Court ruled that pregnancy should factor into the calculation of Ms. Nahum’s reasonable notice period. Given that Ms. Nahum was terminated when she was five (5) months pregnant, it would be impossible for her to find alternative employment in the two (2) month period proposed by the Defendant. The Court awarded a five months’ notice.

If you are experiencing any issues in connection to your employment due to pregnancy, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.

In the decision of Battiston v. Microsoft Canada Inc., 2020 ONSC 4286, the Ontario Superior Court of Justice ruled that the termination provisions in the Stock Award Agreement were unenforceable because the employer failed to draw these provisions to the employee’s attention. Consequently, the Court awarded the employee damages in lieu of stock awards that would vest during the reasonable notice period.

Facts

Mr. Battiston worked with the Defendant for nearly twenty-three (23) years before he was terminated without cause. Mr. Battiston  Apart from his base salary, Mr. Battistion received cash bonus and stock awards that collectively accounted for approximately thirty (30) percent of his compensation.

For the stock awards, Mr. Battiston received an email link that directed him to a website to complete an online acceptance process. Mr. Battiston was required to click acceptance of the stock plan, which indicates that he had read, understood and accepted the Stock Award Agreement and the accompanying documents. Mr. Battistion confirmed that he received such emails each year. He simply clicked acceptance without reading the Agreement given the length of it.

The employer took a position that the termination provisions in the Stock Awards agreement were enforceable, and thus he was not entitled to the awarded but unvested stock awards upon his termination. In response, Mr. Battiston sued his employer for wrongful dismissal and claimed that he was entitled to the damages arising from the failure to vest shares over the reasonable notice period.

Decision

The Court noted that there is no dispute that the stock awards were an integral part of Mr. Battiston’s compensation package, thus triggering a common law entitlement to damages in lieu of stock awards.

The Court determined that Stock Award Agreement unambiguously displaces Mr. Battiston’s right to unvested stock awards upon termination without cause. However, the termination provisions were unenforceable as they were not drawn to Mr. Battiston’s attention by his employer.  Relying upon the contract law principle and a number of case law, the Court noted that “reasonable measures must be taken to draw harsh and oppressive terms to the attention of the other party” (para. 36).  The termination provisions in the Agreement were harsh and oppressive. The email communication that accompanied the notice of the stock award did not amount to reasonable measures to draw the termination provisions to Mr. Battiston’s attention.  Therefore, the termination provisions of the Stock Award Agreement were unenforceable. Mr. Battiston was entitled to the damages in lieu of stock awards that would vest over the reasonable notice period.

Takeaway

This case serves as a reminder that employers should adopt reasonable measures to highlight harsh and oppressive terms in the employment contract and bring them to the employees’ attention. It appears that by sending employees an email notification where a click of acceptance is required, employers are doing far from enough. Employers could summarize those terms in a memorandum or in an email that attaches the agreement and require employees to sign an acknowledgment letter in which the employee acknowledges having received and read the terms in the agreement. It is advisable for employers to consult a lawyer when drafting termination provisions in the employment contract.

It is also strongly recommended for employees to consult an employment lawyer before signing any settlement documents when they are terminated. If you are experiencing any employment law issues in regard to your termination, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.

In 2020, the Ontario Court of Appeal held in Waksdale v Swegon North America Inc., 2020 ONCA 391 that if anywhere in the termination provision of an employment contract fails to abide by the minimum standards set out the Employment Standards Act, 2000 (ESA), the entire termination provision will be invalid. In January 2021, the Supreme Court denied leave to appeal this decision. 

Facts

The plaintiff employee, Mr. Waksdale, sued his former employer Swegon North America Inc., for wrongful dismissal. After working at the defendant corporation for eight months, Mr. Waksdale was terminated without cause. He sued for six-months pay in lieu of reasonable notice. The Ontario Superior Court of Justice dismissed the plaintiff’s action, which was subsequently overruled by the Court of Appeal.

Mr. Waksdale’s employment contract had a “Termination Without Cause” provision and a “Termination for Cause” provision respectively. The “Termination Without Cause” provided that if the employee’s employment is terminated without cause, he 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 ESA. However, the employer conceded that the “Termination for Cause” provision violated ESA, but the exact language of this clause was cited by neither the Court of Appeal nor the Superior Court.

Both parties were in consensus that the “Termination Without Cause” provision was compliant with the ESA while the “Termination for Cause” provision was not and thus unenforceable. Mr. Waksdale took the position that the entire termination clause in his employment contract was void because it was an attempt to contract out of the minimum standards of the ESA.

Decision

The issue to be examined is whether the illegality of the “Termination for Cause” provision rendered the “Termination Without Cause” provision unenforceable. The Court of Appeal started with the principles on interpretation of termination clauses set out in Wood v Fred Deeley Imports Ltd., 2017 ONCA 158, that 1) as the ESA’s legislative intention is to protect employee interest, courts shall interpret it in a manner that encourages employers to comply with its minimum requirements, and 2) termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA.

In light of these principles, the Court held that “[a]n employment agreement must be interpreted as a whole and not on a piecemeal basis”. The termination provisions shall be read as a whole, and if any part violates the ESA, they all become invalid. The Court further elaborated that “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”.

Furthermore, the employer attempted to invoke a severability clause in the employment contract which stated that if any part of the contract is found to be invalid, illegal or enforceable, all remaining covenants, terms, conditions and provisions shall be considered severable and shall remain in full force and effect. The Court found this clause inapplicable in the case in question, pointing out that a severability clause cannot have any effect on clauses of a contract that have been made void by statute.

Key Takeways For Employers And Employees

For employers, the impact of this decision is significant. If the termination provisions in the employment contract fail to comply with ESA standards at any point, it may render the entire termination provisions unenforceable, and it cannot be saved by a severability clause. Therefore, it is advisable to review the employment contracts with a lawyer to see if there are valid and legally enforceable termination provisions in place, which can limit their employees’ termination and severance pay to the Employment Standards Act minimums.

For employees, this case provides more clarity in terms of ascertaining their rights upon wrongful termination and challenging termination provisions in employment contracts. It will be helpful for an employee to consult a lawyer to examine whether the employment contract is valid and enforceable and discover what their lawful entitlements will be upon termination.

If you are experiencing any issues in connection to the termination provisions in your employment contract, Top Toronto employment lawyer, Stacey ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.