Month: December 2023

ESA Termination Entitlements

Workers who have been terminated are provided minimum statutory entitlements in Ontario’s Employment Standards Act. The act outlines minimum entitlements for notice periods based on how long a worker has been employed. Minimum notice period entitlement under the ESA ranges from 1 week for workers who have been employed for less than 1 year, to 8 weeks if workers have been employed for 8 years or more. The Ontario Court of Appeal in Stevens v. The Globe and Mail has stated that the purpose of minimum notice periods is to soften the economic dislocation of the employee resulting from dismissal. In addition to minimum notice periods, the ESA also entitles certain workers to statutory severance pay. While severance is often used colloquially to refer to any payments made in the wake of termination, statutory severance pay is distinct from statutory reasonable notice. Workers are owed severance pay only under certain restrictive conditions. Firstly, workers must have worked with the employer for 5 years or more. Secondly, one of two things must be the case. Either the workers’ jobs must be permanently discontinued, and the worker is one of 50 or more workers affected by this elimination; or the employer has a payroll of $2.5 million or more. Under these circumstances, a worker is entitled to statutory severance pay, which amounts to 1 week per year of service on a pro-rata basis. In other words, every year of service results in 1 week of severance pay, and partial years of service entitle workers to partial weeks of severance pay.

Common Law Reasonable Notice

In addition to ESA termination entitlements, many workers are entitled to common law reasonable notice. Reasonable notice under common law tends to be more expansive than reasonable notice entitlements under the ESA and can provide workers with a greater degree of security after being terminated. Determining common law reasonable notice is significantly more complicated than the values available under the ESA. Common law reasonable notice is determined by a number of factors known as the Bardal factors, named after Bardal v. Globe & Mail Ltd. These factors include, but are not limited to, the workers:

• Character of employment;
• Length of service;
• Age; and
• Availability of similar employment regarding experience, training, and qualifications of the worker.

These factors, among others, are generally used to determine a workers’ common law reasonable notice period. As the Ontario Court of Appeal in Minott v. O’Shanter Development Company Ltd., has stated, calculating a worker’s reasonable notice period “is an art not a science”. In other words, reasonable notice periods can vary from case to case, based on the circumstances of the worker and their termination. Nevertheless, reasonable notice periods tend to exceed ESA entitlements, and can help workers recover from an unexpected termination of employment.

Reasonable Notice and ESA Entitlements

While reasonable notice typically provides greater relief for workers above and beyond statutory entitlements under the ESA, there are certain aspects of reasonable notice that interact with the minimum standards legislation. Most crucially, workers should be aware that ESA entitlements are included under reasonable notice, as outlined by the Ontario Court of Appeal in Stevens v. The Globe and Mail. In that case, the Ontario Superior Court ruled Stevens was entitled to 21 months’ compensation for reasonable notice; the Court of Appeal confirmed that both ESA notice periods in addition to severance pay were to be deducted from the 21 months’ compensation. The Court of Appeal held that ESA entitlements are specifically minimum entitlements, not separate from common law reasonable notice which can extend above and beyond those minimum entitlements yet nevertheless include those minimum entitlements. The Court of Appeal held that both severance pay and common law reasonable notice serve the same purpose of providing workers with an economic cushion from termination. More recently, in Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd., the Ontario Court of Appeal reconfirmed that severance pay is to be included in calculating common law reasonable notice for workers. Workers can claim both ESA entitlements in addition to common law reasonable notice upon termination, but the Court of Appeal prohibited “double recovery”. In other words, statutory entitlements are to be included in any calculation of common law reasonable notice.

For Cause Termination

Workers in Ontario, and indeed across Canada, can be terminated from their employment for cause. For cause dismissal is the most severe form of dismissal, and 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 one 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.

Disciplinary Records and Culminating Incident

Since dismissal for cause typically requires progressive discipline being administered prior to the dismissal, disciplinary records are often admissible to demonstrate that a worker has a chequered record. Even if a worker has not engaged in sufficiently serious misconduct to warrant a dismissal, the worker’s disciplinary record can be used by the employer to demonstrate that the worker does not appropriately respond to discipline. In other words, a worker’s disciplinary record can be used to justify dismissal even in instances of relatively minor misconduct so long as that minor misconduct serves essentially as the straw that breaks the camel’s back.

Nevertheless, there are some restrictions to relying upon disciplinary records to dismiss workers for cause. In unionized workplaces, workers can grieve discipline when it is administered. This means that workers can object to discipline after the fact, and if their objection is successful, the discipline can be set aside and not counted on their record. In federally regulated workplaces, where workers are covered by the Canada Labour Code, even non-unionized workers can enjoy the benefit of this policy. Pursuant to the Supreme Court of Canada’s ruling in Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, federally regulated workers covered by the Canada Labour Code are entitled to similar protections that unionized workers are afforded. Consequently, while federally regulated non-unionized workers cannot grieve discipline after it is imposed, if they are later dismissed for cause, they have an opportunity to challenge the disciplinary record that the employer relies upon to demonstrate that such discipline was improper and should not be used to justify dismissal. This concept is confirmed in Granite Transport Ltd. and Golphy, Re, where the adjudicator stated that non-unionized workers under the Canada Labour Code can challenge disciplinary records relied upon by their employer at the time of dismissal. If the prior discipline imposed was baseless or too severe, the dismissal itself may likewise be baseless or too severe a response to the purported misconduct. This is a significant form of protection for workers to avoid being dismissed for cause, although it is not the only form of protection available.

Sunset Clause

Sunset clauses are another form of protection available to workers with regards to disciplinary records. A sunset clause is a term of contract that outlines how long a given piece of discipline is permitted to remain on a worker’s record. Because these are specialized terms under contract, they can be negotiated to specify various lengths of time after which the discipline cannot be relied upon in efforts to terminate the worker. While sunset clauses are most frequently seen under collective agreements in the unionized context, they can also be established by workers in non-unionized fields under their employment contracts. The protections afforded by a sunset clause are quite significant as they eliminate the ability of employers to rely upon prior discipline that has been subject to the clause. Nevertheless, a disciplinary record can still be maintained for the purpose of challenging a worker’s claim to having a spotless or clean disciplinary record, even if the record itself cannot be used to justify progressive discipline or dismissal for cause.

Employment Standards

Ontario’s Employment Standards Act requires equal pay for equal work. If workers of a different sex perform the substantially the same kind of work and the job requires the substantially the same level of skill, effort, and responsibility, and the work is performed under similar working conditions, then these workers are entitled to equal pay. The only limits to this are seniority systems, merit systems, systems measuring earnings by quantity or quality of production, or reasons other than sex. These limitations can be particularly restrictive for workers who perform similar tasks as their colleagues yet earn less due to reasons other than sex. Additionally, the ESA protects workers from reprisals when asking fellow workers about their compensation to determine or assist others in determining whether their employer is complying with equal pay for equal work provisions. The ESA also protects workers from having their wages lowered in order to comply with the requirements around equal pay for equal work.

Pay Equity

For many workers, issues about pay parity can be incredibly concerning. In Ontario, the Pay Equity Act has been established as remedial legislation to reduce discrepancies between the earnings of men and women. Specifically, the Pay Equity Act organizes jobs in a workplace as being either male job classes or female job classes. These classifications are not meant to be exclusionary or indicate that one such job is or ought to be delegated to a specific gender of person. Instead, these classifications are established based on material facts, specifically whether 60% of workers are a specific gender within the class, alongside the historical position of the class and gender stereotypes regarding the type of work. The intention behind these provisions is to ensure that the disparity in earnings of female job classes is reduced such that they approach if not achieve parity with male job classes. Achievement of pay equity occurs when the pay rate of a female job class is at least equal to the male job class in the workplace where the work performed by the two job classes is of equal or comparable value. Additionally, workers disclosing their pay scale under the Pay Equity Act are protected from retaliation or reprisals. The Pay Equity Act also protects workers from having their wages lowered in order to achieve pay equity between female and male job classes. The Pay Equity Act is a significant step towards reducing inequalities in earnings between women and men in the workplace.

Pay Transparency

The Ontario government passed the Pay Transparency Act, in 2018, although the legislation itself has not actually had a chance to enter into force. In essence, it provides workers with anti-reprisal protections, giving workers the freedom to inquire about their earnings, disclose their compensation with fellow workers. Additionally, it requires employers to construct Pay transparency records, affording workers the opportunity to see the differences in payment earned by other workers throughout the company. These pay transparency records are to be posted online or conspicuously on site for workers to easily access. Additionally, the Ministry is obliged to publish the pay transparency records. These provisions could make workplaces more open to workers and inform workers of the relative pay grades their fellow workers earn. However, as mentioned earlier, these protections have yet to be implemented, despite the bill being passed in 2018.

Common Law

Workers in Ontario are also protected under the common law regarding termination for cause. If an employer terminates a worker’s employment because the worker disclosed their wages to colleagues, disclosure of wages must be a prohibited term under the company’s policies or the employment contract. In either case, the policy itself must be enforceable as an element of the contract, failing which, the policy cannot be relied upon to terminate the worker’s employment. If the policy or contractual terms are outright or potentially illegal, then the specific provision, if not the entire contract, will be unenforceable. Furthermore, workplace policies or rules must be applicable in the workplace before anyone can be dismissed by them. To determine whether workplace policies or rules are applicable, the starting place is Lumber & Sawmill Workers’ Union, Local 2537 v KVP Co. Ltd. This case outlines that workplace policies must be clear and unequivocal, reasonable, and consistently enforced, in addition, the worker must be made aware of the policy and made aware that breach of the policy could result in termination. If an employer fails to take these steps, they will not be able to rely on the workplace policy to terminate a worker for disclosing their wages.  Even if a rule is reasonable and enforceable, the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38, held that the breach of the rule must be of such a significant degree to justify dismissal in the circumstances. If the breach of the rule did not irreparably harm the employment relationship, dismissal for cause may be too harsh a penalty. Nevertheless, if a rule is found to be reasonable, discipline can still be imposed for breaching the rule, even if dismissal may not be permitted.