Author: Stacey R. Ball

In Mata, 2024 CIRB 1141, the employee complained that she had been constructively dismissed by her employer after she was placed on a leave without pay for failing to adhere to the employer’s vaccination policies. While Vice-Chairperson Love ultimately determined the employee had not been constructively dismissed, he walked through the principles of constructive dismissal for federal employees covered by the Canada Labour Code. 

Legal Basis for Constructive Dismissal Under the Canada Labour Code

Firstly, Vice-Chair Love indicated that, although the Code does not explicitly use the term “constructive dismissal”, this form of dismissals is ultimately incorporated into the Code. Citing the Federal Court of Appeal’s decision in Srougi v. Lufthansa German Airlines, Vice-Chair Love indicated that dismissal under the Code is “the implementation by the employer of his intention to unilaterally terminate the contract of employment binding him to his employee”. In other words, the concept of an unjust dismissal under the Code includes the idea of a constructive dismissal. Having determined that the Code’s unjust dismissal provisions also apply for constructive dismissals, Vice-Chair Love moved on to outline the legal test to determine whether a constructive dismissal has occurred.

Tests for Constructive Dismissal

As Vice-Chair Love indicated, there are two potential methods whereby a constructive dismissal may occur. The first is when the employer makes a single unilateral change that constitutes a substantial breach of the employment contract. The second is when the employer engages in a series of acts that demonstrates it no longer intends to be bound by the contract of employment. In either circumstance, the employer will have repudiated the employment contract through its conduct, hence the employee will have been constructively dismissed. 

Beyond the two potential avenues for constructive dismissal, Vice-Chair Love also cited the Supreme Court’s decision in Potter regarding the two-stage analytical process used for constructive dismissal. Vice-Chair Love indicates that the two-stage process applies for instances of a single unilateral breach. The first stage requires the decision maker to determine whether the employer breached the contract, considering whether the employer had the authority to make the changes to the contract, and whether the employee essentially condoned the change. The second stage considers whether a reasonable person in the same situation as the employee would have felt that the essential terms of the contract had been changed. In circumstances where the constructive dismissal arises from a series of acts, the question revolves around whether the cumulative effect of the acts shows the employer no longer intends to be bound by the employment contract.

Application to the Facts of the Case

After laying out the fundamental principles underlying constructive dismissal in a federal context, Vice-Chair Love examined how the law might apply to the facts of the case. In particular, the complainant was concerned that she had been constructively dismissed when she was put on a leave without pay in response to her vaccination status. While unpaid suspensions can in some contexts demonstrate a constructive dismissal, it is important in the first place to determine whether unpaid suspensions were contemplated in the contract of employment. In other words, if an employment contract provides for unpaid suspensions, it may limit the ability to pursue a constructive dismissal case. In this case, while unpaid leaves were not originally part of the employment contract, they did become part of the employment contract through the employer’s ability to make reasonable rules affecting the workplace. 

As Vice-Chair Love indicates, an employer has the right to make reasonable rules for the management of its workplace, but there are some constraints to these rules in the context of unjust dismissals. Rules that are introduced to the workplace follow the KVP test. In particular, unilaterally introduced rules in the workplace:

1. Must not be unreasonable;
2. Must be clear and unequivocal;
3. Must be brought to the attention of the affected employee before the employer can act on it;
4. The employee must be notified that the breach of such a rule could result in discharge, if it is used as a foundation for discharge; and 
5. The rule should be consistently enforced from the time the employer introduced it.

It is precisely these features that Vice-Chair Love considered regarding the new leave without pay policy. In short, Vice-Chair Love noted that the employer made a reasonable rule for the health and safety of its employees in requiring vaccination status to be reported. Furthermore, he noted that the rule was clear and unequivocal and had been brought to the complainant’s attention. On top of that, the employee was notified that breach of the rule could result in discharge, and that the rule had been consistently enforced as others were also placed on leaves without pay. Ultimately, however, Vice-Chair Love noted that the employee was never dismissed, as she was later permitted to, and actually did, return to work after updating her vaccination status. Nevertheless, this case provides helpful insights to constructive dismissal issues in federal workplaces.

A recent case in Alberta has helpfully reviewed the laws of contractual interpretation in an employment law context. In Plotnikoff v. Associated Engineering Alberta Ltd., 2024 ABKB 706, the judge engaged in a thorough review of case law regarding contractual interpretation.

Standard of Review for Contractual Interpretation

First and foremost, the judge noted the particular standard of review for contracts on appeals. In particular, contractual interpretation entails issues of mixed fact and law, hence it is reviewable on the standard of palpable and overriding error. Absent such an error, a reviewing court is not entitled to review the lower court’s interpretation of a contract.

Key Principles of Employment Contract Interpretation

Moving forward, the judge reflected on the sets of principles that apply specifically to the interpretation of employment contracts.

Inequality of Bargaining Power in Employment Contracts

First and foremost, the judge noted that courts have recognized the inequality of bargaining power inherent in the employment relationship and the limited opportunity of employees to negotiate contractual terms. Consequently, certain principles for contractual interpretation have developed in the employment contract context. 

Doctrine of Contra Proferentem in Employment Law

One particular aspect of contractual interpretation in the employment law context is the doctrine of contra proferentem, which interprets ambiguities in the employment contract in favour of the employee. Citing case law, the judge notes that “in employment law, uncertainty ought to be resolved in favour of the employee”, and that given “a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee”. In other words, the contract is interpreted against the employer who drafted the contract, because the employer is presumed to be in a position of sufficient sophistication to draft the contract to say precisely what they want to say. 

Presumption of Reasonable Notice in Employment Contracts

In addition to this principle, the judge also added that employment contracts are presumed to contain an implied term requiring employers to provide employees with reasonable notice of dismissal. Of course, such an implied term can be modified or replaced with explicit limitations to entitlement to reasonable notice. However, there are various requirements around any attempt to limit notice entitlements. 

Requirements for Limiting Notice Entitlements

One such requirement is that any attempt to limit entitlements in breach of employment standards legislation is a breach of the law and is hence unenforceable. Another requirement, which the judge noted is that “an enforceable employment contract must contain clear and unequivocal language to extinguish or limit an employee’s common law rights”. Failure to meet this requirement permits the employee to pursue common law reasonable notice. In relation to the above principle that ambiguities are resolved in favour of the employee, the judge noted that, in fact, there is a presumption that the employee is actually entitled to common law reasonable notice, and only if the contract unambiguously removes or limits that right will that presumption be defeated. 

The judge’s thorough-going analysis of the general principles of contractual interpretation pertaining to employment contracts provides a very helpful summary to workers hoping to understand their entitlements and what to look for in their own employment contracts.

How Contractual Interpretation Applied in the Case

The judge went on to apply these principles of contractual interpretation to the particular termination clause in this case. The termination clause stated:

“Termination without Cause: The Company may terminate employment without cause upon providing the Employee with notice as may be mandated by the Employment Standards legislation or such additional notice as the Company, in its sole discretion, may provide or, at our option, pay in lieu of such notice”.

The judge in this case upheld the trial judge’s interpretation of the termination clause as not limiting Mr. Plotnikoff’s entitlement to reasonable notice. In reaching this conclusion, the judge cited both the Supreme Court of Canada’s decision in Machtinger, but also numerous Ontario cases to outline how the clause did not actually limit entitlements. Particularly, the judge ruled that the clause only indicates that the worker would receive employment standards notice. But notice under employment standards legislation is only a minimum standard. 

No maximum standard is outlined in employment standards legislation, nor does the employment standards legislation remove the presumption of common law reasonable notice. In other words, the judge found that the clause did not unambiguously remove or limit Mr. Plotnikoff’s entitlement to reasonable notice. 

Additionally, the judge noted that the employer even contemplated providing more than the minimum standards through the language of “additional notice as the company, in its sole discretion, may provide”. The judge found that such a contemplation also indicated that there was no unambiguous limit of notice to that outline in the employment standards legislation.

The case of Maximenko v. Zim, 2024 ONSC 5540, helpfully illustrates some of the nitty-gritty details of a wrongful dismissal case. In particular, it provides some helpful guidance on issues of mitigation and elements of compensation. Workers who have been terminated should be aware of what elements of their compensation they may be entitled to during a period of reasonable notice. Likewise, issues of mitigation can be tricky and can often make or break a wrongful dismissal case, hence it is helpful to have a sense of what the courts have found to be adequate mitigation efforts.

Mitigation

Workers who have been wrongfully dismissed have a duty to mitigate their damages. In other words, workers must take reasonable steps to minimize their losses resulting from their termination by looking for new employment. If a worker fails to take these reasonable steps, compensation awarded for reasonable notice may be reduced in proportion to the worker’s failure to mitigate. The judge outlined the test for proving that a worker has failed to mitigate their damages. Specifically, the onus is on the employer to prove that “(1) the employee failed to take reasonable steps to mitigate damages, and (2) if reasonable steps had been taken, the employee would have been expected to secure a comparable position reasonably adapted to their abilities”. The judge went on to add that workers’ mitigation efforts are not held up to a standard of perfection. 

In the circumstances of this case, Ms. Maximenko applied for over 70 jobs between the day she was dismissed and the day her case was heard by the court (i.e., 18 months). Despite this, the employer argued that her efforts to find new employment were inadequate. In particular, the employer had sent Ms. Maximenko numerous job links after having dismissed her. However, Ms. Maximenko provided notes of these potential jobs noting that some were no longer available, some required qualifications she did not have. The court took note of Ms. Maximenko’s engagement with the employer-provided job links, holding that she had actually followed up on each posting, even if she ultimately determined the jobs were not the right fit for her. 

Additionally, the court took relevant notice of Ms. Maximenko having family care obligations for her ill mother, who later passed on. The judge acknowledged that Ms. Maximenko’s job search efforts decreased during that timeframe to assist with her mother’s illness and passing. Ultimately, the court determined that, while Ms. Maximenko’s mitigation efforts may not have been perfect, they were reasonable. The court pointed towards the 70 applications she did pursue, as well as the difficulty for older employees, as she was in her 60’s by the time of the hearing, in finding new employment. Beyond that, the court took note that the employer did not demonstrate that Ms. Maximenko could have been successful if she took reasonable steps.

Elements of Compensation

Ultimately, the judge determined the reasonable notice period was 24 months. Then, the judge moved to focus on the constituent elements of Ms. Maximenko’s compensation. Helpfully, both the employer and Ms. Maximenko agreed on these elements, entailing annual salary, bonuses, car allowance, health insurance, and defined pension benefit plan. All of these elements formed part of Ms. Maximenko’s total compensation and should be covered under the reasonable notice period. While someone’s annual salary is generally not challenged for compensation, other elements of compensation like bonuses can occasionally result in further dispute during a wrongful dismissal case. 

Despite the employer claiming that the annual bonuses were discretionary, the judge determined that Ms. Maximenko was entitled to her bonus throughout the notice period. However, due to evidence advanced at trial, there was a discount applied to the bonus. In particular, the employer paid out no bonuses in 2023, hence Ms. Maximenko could not receive a bonus that year. However, this was the only year with evidence showing a bonus was not paid out. In sum, the court applied a 3-year average to determine the amount of Ms. Maximenko’s bonus, with a particularized discount to reflect the missing 2023 bonus payout. 

When ascertaining the value of the pension benefits, the court noted that, absent evidence on the present and commuted values of the pension, the value of the pension contribution is assumed to be a reasonable measure of the damages. To determine the reasonable measure of damages in this case, the court doubled the pension adjustment amount from Ms. Maximenko’s 2020-2022 T4 returns to reflect the 24-month notice period.

Federal Court of Appeal Orders Redetermination

The Federal Court of Appeal recently ruled that an adjudicator’s decision in an unjust dismissal case was unreasonable. In doing so, the court ordered the case to be redetermined by another adjudicator. 

Background: Maternity Leave and Job Elimination

The facts of the case are rather particular. The complainant took a maternity leave, during which time her business analyst position was backfilled. Upon returning from her maternity leave, the complainant worked alongside her fellow business analyst who previously backfilled her position. The employer then engaged in corporate downsizing, and determined it only needed one business analyst, choosing to lay off the complainant.

Adjudicator’s Decision: Employer Acted in Good Faith

The adjudicator determined the employer engaged in a good faith restructuring. Further, the adjudicator found that the employer decided to retain the complainant’s fellow employee because the fellow employee had more seniority, and the employer believed they also had more experience in the position. The adjudicator determined that the complainant was reinstated after her leave, and that her maternity leave was not a factor in the decision to terminate her.

Complainant’s Argument: Discriminatory Impact of Selection Criteria

However, the court noted that the adjudicator failed to consider another argument that the complainant made. Namely, the argument that the employer’s decision was ultimately discriminatory because the selection criteria adversely affected the complainant due to her maternity leave, hence the dismissal was unjust. The complainant argued that discounting time she spent on maternity leave was discriminatory. Furthermore, she argued that there cannot be proper lay off for shortage of work or discontinuance of function if that lay off violates the maternity leave protections of the Canada Labour Code, which requires an employee’s employment and seniority be deemed continuous through maternity leave.

Judicial Review and the Federal Court’s Overreach

After the adjudicator decided that the complainant was not unjustly dismissed, she pursued a judicial review at the Federal Court. The Federal Court ultimately upheld the adjudicator’s award but did so by making a decision on the arguments which the adjudicator ultimately did not. The Federal Court of Appeal rightly noted that a reviewing court is limited in its functions on judicial review in an unjust dismissal case. In citing the Supreme Court’s decision in Vavilov, the Federal Court of Appeal noted that “a reviewing court should not step in and decide issues of significance that are relevant to the outcome that were argued before the administrative decision maker that the decision maker neglected to consider”. Unfortunately, that is precisely what the Federal Court did in its decision. Instead, the Federal Court should have focused on the reasons given by the adjudicator and determined whether the adjudicator properly considered the arguments before them. In this case, the Federal Court of Appeal noted that, had the Federal Court done so, “it would have been apparent that the adjudicator’s decision was unreasonable for its failure to address important arguments advanced by the appellant”.

Federal Court of Appeal’s Decision: Unreasonable Ruling Warrants Redetermination

The Federal Court of Appeal noted that the complainant’s arguments regarding discrimination and violation of the maternity leave provisions in the Code were substantive and formed an important part of her case. While the Court did acknowledge that adjudicators do not need to respond to every possible line of analysis, failure to consider key issues or central arguments raised by the parties can undermine the reasonableness of an adjudicator’s decision. The Court also acknowledged that case law supported the argument that decisions are discriminatory if one of the factors it relied on was discriminatory. Further, the Court indicated that the employer’s approach to the Code violates the statutory protections of the minimum standards legislation. Nevertheless, the Court did not determine these issues, indicating that to do so would place it in the same error that the Federal Court made. Instead, the Court ordered that the complaint be considered by a different adjudicator for the alternative arguments she raised which had not been considered by the adjudicator. 

The Court of Appeal has recently issued a decision reaffirming its previous decision in Wacksdale v. Swegon North America Inc., 2020 ONCA 391. In that case, the Court of Appeal made a landmark decision that “for-cause” termination provisions that violate the Employment Standards Act are illegal, and that breach of the Employment Standards Act in one termination provision means all other termination provisions are likewise invalid.

Why the “For Cause” Termination Provision Was Deemed an Unenforceable Termination Clause

In the present case, the Court of Appeal was asked to review the lower court’s decision on the validity of both the “without cause” and for cause” termination provisions. At the outset, the Court of Appeal indicated that the “for cause” termination provision is illegal. This provision stated that the employer could terminate the employee’s employment without notice or pay for “cause”, while defining “cause” in a very broad manner beyond the exceptions in the Employment Standards Act. Consequently, the clause was found illegal. As the Court explained, because the Employment Standards Act is remedial legislation, courts should favour interpretations of the act which encourage employers to comply with the act. Failure to do so may result in making the act ineffectual. As the Court noted, “if the only consequence for an employer of drafting a termination clause that does not comply with ESA minimums is an order that they comply, employers will have little incentive to draft a lawful termination clause”. Another element that the Court indicated regarding unenforceable termination clauses is that compliance with the ESA at termination does not fix a termination clause that was unenforceable from the beginning of the employment relationship. 

The Court reminded that failure to comply with the high standard of misconduct outlined in the ESA in drafting a termination clause can lead to such a clause being unenforceable. In this case, that is precisely what occurred. The “for cause” termination provision purported to terminate the employee for cause without payment as long as the employee engaged in a much lower standard of misconduct than that outlined in the ESA. Consequently, the clause was found to be unenforceable. Beyond the mere fact that the cause stipulated was of a lower standard, the clause itself was also an “inclusive” clause. The clause also used the phrase that cause “shall include but is not limited to the following”, a phrase which the Court held permitted the employer to expand and deem as “cause” things that were not listed in the contract, making the definition of “cause” even more expansive beyond the narrow and high standard as outlined in the ESA.

Impact of an Unenforceable Termination Clause on Employment Contracts

Beyond the cause provision, the Court was also asked to review the lower court’s decision on the without cause provision. The Court of Appeal refused to make a ruling on this provision, determining that because the “for cause” provision violates the Employment Standards Act, the entire set of termination provisions are entirely invalid. The Court of Appeal determined that it would be best to leave the question of the without cause provision for a case whereby determination of that question would directly affect the outcome of the case. 

The Ontario Court of Appeal recently provided some clarity around the frustration of an employment contract and the consequences arising therefrom. In Croke v. VuPoint Systems Ltd., the Court of Appeal dealt with a case around a mandatory vaccination policy. The employer was contracted to provide services for Bell Canada and Bell ExpressVu, who provided 99% of their customer base. Bell introduced a new policy requiring mandatory vaccination against COVID-19 for personnel working at or visiting Bell locations or otherwise interacting with Bell customers in-person. VuPoint had to introduce a similar policy to ensure it could continue providing services to Ball. There were no alternatives to vaccination, and non-compliant employees of VuPoint were prohibited from doing work with Bell and were told they may not receive the assignment of jobs. 

The employee was informed of the requirement to get vaccinated, and began applying for new jobs which did not require vaccination. He was later given two weeks’ notice of his termination, during which period he informed his employer that he would not comply with the requirement and believed it to be discriminatory. After providing this summary of facts, the Court of Appeal went on to determine the employment contract was in fact frustrated.

Frustration of Contract

The Ontario Court of Appeal set out the test for frustration of contract as developed by the Supreme Court. Specifically, frustration occurs when “a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes ‘a thing radically different from that which was undertaken by the contract’”. To establish frustration, a party needs to show there was a “supervening event” that a) radically altered the contractual obligations, and b) was unforeseeable and not contemplated in the contract, and c) was not caused by the parties. 

The employee argued that the frustration was caused by his own voluntary decision not to comply with the vaccination policy. However, the Court of Appeal held that the contract was frustrated through Bell’s vaccination policy as the intervening event, which prevented any non-vaccinated worker from working on Bell locations or interacting in-person with Bell customers. The Court of Appeal likened this new policy to a new regulatory requirement: “absent vaccination, VuPoint employees were ineligible to work on Bell Projects”. The Court also indicated frustration was not self-induced simply because VuPoint was open to allow the employee to continue working for them if he changed his mind and got vaccinated. The Court mused that if the policy were a merely temporary or emergency measure, or if the employee intended to become vaccinated but could not do so in time, the fundamental obligations in the employment agreement may not have been radically altered.  

Nevertheless, the Court of Appeal agreed with the lower court that there was no default in the employment agreement between the employee and employer. Instead, Bell’s vaccination policy was the supervening event, and the analysis then turns towards if performance of the employment contract became radically different than what the parties contracted for, and whether the change was foreseeable. 

Regarding whether the Bell policy radically changed the terms of employment, the Court of Appeal again agreed with the lower Court. Due to the Bell Policy, the employee was completely unable to perform his duties for VuPoint for the foreseeable future. Further, this was unforeseen and not contemplated by either party when they entered into the contract. The Court indicated that the focus of the foreseeability question is when the contract is signed and must be considered from that timeframe. In this case, the contract was entered in 2014, and neither party at that time could have foreseen a global pandemic which would cause Bell to implement its vaccination policy. 

Termination of Employment

The Court of Appeal went on to consider the employee’s argument that he had actually been terminated for just cause rather than because the employment contract was frustrated. The employee insisted that other, non-disciplinary, or lesser disciplinary actions should have been taken by VuPoint instead of termination. The Court determined that VuPoint’s only basis for termination was frustration of contract, and such terminations are no-fault terminations releasing the parties from any further obligations to perform. In other words, an employee would not be entitled to damages for wrongful dismissal. In keeping with this determination, the Court reiterated that when an employment contract is frustrated, there is no fixed legal requirement that an employee be given advance notice that the employment relationship has been frustrated. Additionally, there is no requirement that an employee must be provided with an opportunity to rectify their non-eligibility to work before they can be terminated via frustration of contract. However, an employer that does not do these things, depending on the situation, may be unable to establish the supervening event that radically altered the fundamental obligations of the contract. Given the employee’s failure to indicate that he needed more time to become vaccinated, the Court found that the termination of his employment was appropriate for frustration of contract.

In Timmins v. Artisan Cells, the Ontario Superior Court briefly considered an argument that the employment contract breached Ontario’s Employment Standards Act. The employment contract stipulated that any dispute or claim related to any dispute under the contract could only be resolved under the exclusive jurisdiction of the courts of Ontario. It was argued that this clause ousted the ability of the employee to file a complaint with the Ministry of Labour under s. 96(1) of the ESA, hence breached the legislation. This argument was presented as a novel breach of the ESA, and further, that any employment contracts which breach the ESA are void. Additionally, it was argued that the termination provisions also breached the ESA. Despite the arguments presented at trial, the Court determined that it was not in a position to resolve the issue because the employer had not appeared at court and hence could not present any opposing account of the situation. Further, the Court determined that the matter could be fully determined by addressing other issues. Consequently, the Court decided to shelf the proposed novel breach for lack of full argument by both parties.

Repudiation of the Employment Contract

Given the Court’s decision that the novel breach of the Employment Standards Act would be better addressed with full argument, the Court turned to consider the argument of repudiation of the employment contract. To establish repudiation of a contract, the Court indicated there must be an investigation into the nature of the contract, the attendant circumstances, and the motives which prompted the breach. In this case, the contract specified that the employee was entitled to the greater of either a) minimum notice under the ESA or b) 3 months’ notice or pay in lieu thereof. Ultimately, the employee was not provided with the amount of notice as specified in the contract. Instead, he only received notice for one week and was told he would not receive anything more unless he signed a broad full and final release, which included a release for any other claim, and non-disclosure and non-disparagement clauses. There was no explanation given by the employer as to why the employee did not receive his contractual entitlements to notice. The Court found it was clear the only motivation for withholding the remaining notice payments was to secure the release. Consequently, the Court determined that by failing to comply with the terms of the termination provisions, the employer repudiated the employment contract.

Given the employment contract was repudiated, the employee was entitled to common law notice of dismissal, which in this case proved to be significantly more expansive than his contractual entitlements. The Court conducted a full analysis of entitlement to notice at common law, assessing the employee as being 44 years old, having been employed for three-and-a-half years, at a Vice President position, and earning over $475,000 per year. The Court determined that the employee was entitled to a 9-month notice period.

Citing the Supreme Court, the Judge indicated that the employee was entitled to all amounts that he would have earned during the notice period, including salary, benefits, and bonuses. In this case, there was a clause in the bonus agreement which stated that an employee needed to be actively employed” to receive the bonus. However, the Court determined this clause was sufficiently ambiguous, and did not properly exclude the bonus from the notice period. Consequently, the employee was entitled to receive his bonus.

Common Employer Doctrine

Another element to this case was that the employee sought to have two entities classified as common employers, hence both would be liable for the damages owed to him. The Court noted that the significant factor is effective control over the employee, though this must be weighed with other factors like the written employment contract. Control over matters like payment of wages and other compensation, method of work, and ability to hire and fire, can all be important elements of showing that degree of control is necessary. Ultimately, the question is an objective one, whereby the parties acted in such a way that they intended to be parties to the employment contract. 

In the present case, the employer had two entities, ADL and ACL, but ACL was created after the employee was formally employed. Nevertheless, the corporate entities acted in concert, orders were given to the employee by both entities without distinction, and the employee was treated as though he worked for both entities. Even on his termination letter, despite being hired by ADL, he was terminated by ACL. Consequently, the court found that the common employer doctrine had been satisfied, and that both ADL and ACL were jointly responsible for damages to the employee.

When leaving work for any reason, an employer must provide workers with an accurate Record of Employment in a timely manner. The Record of Employment is a crucial document for accessing Employment Insurance entitlements under the Employment Insurance Act. The Record provides Service Canada with the information necessary to determine appropriate Employment Insurance benefits and entitlements, especially concerning the amount and duration of any benefits. For workers who have been wrongfully dismissed, it is especially important to have an accurate Record of Employment issued in a timely manner to ensure adequate access to any Employment Insurance benefits.

Pursuant to the Employment Insurance Regulations, Records of Employment must be issued for a worker within a specified timeframe, which varies based on whether the Record of Employment is issued on paper or electronically. If the Record of Employment is issued on paper, it must be provided within five calendar days of either:

• The first day of an interruption of earnings; or
• The day the employer becomes aware of an interruption of earnings.

If the Record of Employment is issued electronically, it must be provided to the worker within 5 calendar days after the end of the pay period during which the worker’s interruption of earnings occurs. However, if a worker’s pay period is monthly, then the electronic Record of Employment must be issued by the earlier of either:

• 5 calendar days after the end of the pay period in which the worker experiences an interruption in earnings; or
• 15 calendar days after the first day of an interruption of earnings.

Employers can submit the ROE to Service Canada electronically. Records of Employment must be issued in a timely manner, in accordance with the rules outlined by the Employment Insurance Regulations.

Record of Employment Must Accurately Describe the Reason for Interrupted Earnings for Service Canada

In addition to the timely issuance of the Record of Employment, the Record itself must accurately describe the reason for the interruption in earnings for employees receiving insurable earnings. Service Canada indicates codes used to describe the reason for the interruption in earnings. The codes are as follows:

• Code A: Shortage of Work (Layoff) – For use when the employee is laid off due to a shortage of or the end of a contract or season.
• Code B: Strike or Lockout – Used when an employee is on strike or has been locked out of the workplace.
• Code C: Return to School – Used when an employee leaves a job to return to school. However, Service Canada is phasing out this code and recommends replacing Code with Code E if returning to School or Code J if leaving to participate in a government-approved apprenticeship program. Code A can also be used if a student is hired on a summer term, co-op term, or other fixed term and they fulfill their term.
• Code D: Illness or Injury – Used when the employee is leaving work because of illness or injury.
• Code E: Quit – Used when the employee voluntarily leaves their work.
• Code F: Maternity – Used only when the employee is pregnant or has recently given birth.
• Code G: Retirement – Used when the employee leaves work because of mandatory retirement or through a workforce reduction approved by Service Canada.
• Code H: Work Sharing – Used when the employee is participating in the Service Canada Work-Sharing program.
• Code J: Apprentice Training – Used when the employee is leaving the workplace temporarily to participate in a government-approved apprenticeship training program.
• Code M: Dismissal or Suspension – Used when the employee has been dismissed or suspended from employment.
• Code N: Leave of Absence – Used when the employee takes a leave of absence.
• Code P: Parental – Used when the employee is leaving the workplace to temporarily take parental or adoption leave.
• Code Z: Compassionate Care/Family Caregiver – Used when the employee is leaving the workplace to temporarily claim compassionate care benefits or family caregiver benefits.
• Code K: Other – Used for reasons other than those listed above that need a deeper explanation which is to be provided in Block 18 within the Record of Employment.

An interruption of earnings occurs when an employee’s salary falls below 60% of their regular weekly earnings due to reasons such as illness, injury, pregnancy, or the need to care for a family member.

Failure to Provide Accurate or Timely Record of Employment for Employment Insurance

If workers have been dismissed from employment and do not receive an accurate or timely Record of Employment, they may not be able to access their entitlements to EI benefits. Without an accurate ROE, workers may not be able to receive EI benefits. Consequently, Courts have held that workers can recover aggravated and punitive damages from employers who fail to provide an accurate and timely Record of Employment.

In a recent case at the Ontario Superior Court, Pohl v. Hudson’s Bay Company, the employer failed to provide an accurate and timely Record of Employment to the worker after he had been dismissed. The Court held that this, among other things, justified an award of damages for the breach of the implied obligation of good faith and fair dealing in the manner of dismissal. Rather than accurately reporting the reason for the worker’s interruption of earnings, the employer provided a Record of Employment stating the worker had been laid off for shortage of work. Additionally, the Record of Employment was provided well beyond the timeframe required. In addition to moral damages, the Court also awarded punitive damages for the very same failure to provide an accurate or timely Record of Employment. Given the consequences for the worker in pursuing their entitlements to Employment Insurance benefits, Courts take a serious approach when employers fail to provide an accurate and timely Record of Employment. The Canada Revenue Agency may also be involved in certain cases related to ROE issuance.

Cost awards have often been an area of controversy for federal employees who have been unjustly dismissed. Under the Canada Labour Code, federal employees who have been terminated after working at their job for a year can exercise their statutory rights to file an unjust dismissal complaint. This statutory right can provide federal employees with significant job protections, including the possibility of being reinstated if the dismissal is found to be unjust. In circumstances where reinstatement is ordered, federal employees can also receive the benefits of “back pay”. In other words, in addition to getting their job back, federal employees can also receive payment for the period they were unjustly dismissed from their jobs, which can help mitigate employee turnover costs. Employee retention is crucial in reducing these turnover costs by avoiding the expenses associated with recruiting and training new employees. While this has the potential to be a very significant remedy for unjustly dismissed federal employees, there have been some concerns around cost awards under the unjust dismissal provision of the Canada Labour Code. Thankfully, some of those concerns have been recently addressed by a decision at the Federal Court of Appeal.

A Case of Wrongful Dismissal: Amer v. Shaw Communications Inc.

The Federal Court of Appeal in Amer v. Shaw Communications Inc. provided some clarity to the issue of costs under a wrongful dismissal complaint. There had long been arbitration cases wherein cost awards were limited, or even refused of federal employees who had been found to be unjustly dismissed. Consulting with an employment lawyer is crucial in wrongful dismissal cases to navigate the legal complexities and secure fair compensation. However, the Federal Court of Appeal’s recent ruling provides a more fulsome approach to unjust dismissal cases under the Canada Labour Code, particularly in the context of employment contracts. The Court of Appeal overturned the Federal Court’s ruling that an order of substantial indemnity costs was inappropriate in the circumstances. The Federal Court refused to award substantial indemnity costs, relying on an older case suggesting that substantial indemnity costs are only to be awarded in cases where the employer engaged in objectionable conduct during litigation.

The Federal Court of Appeal dispelled this presumption in its ruling, holding instead that substantial indemnity costs can be awarded to make the unjustly dismissed federal employee whole. The Employment Standards Act is also relevant in such cases, as it establishes minimum notice periods and severance pay entitlements. This is especially important in the context of an unjustly dismissed federal employee who has engaged in no wrongdoing. Such an employee should not be punished for having to pursue their legal rights by forcing them to expend significant sums of money on legal fees. Given the financial costs of pursuing an unjust dismissal case, employees may be substantively unable to pursue their rights, even if they have them formally under the Canada Labour Code. In order to rectify this issue, the Federal Court of Appeal acknowledged that to ensure the rights under the Canada Labour Code are meaningful, it makes practical sense to provide federal employees with the ability to recover costs upon litigation, even to the degree of substantial indemnity costs. The Court of Appeal indicated that this is especially important in circumstances where unjustly dismissed federal employees are of limited financial means and the employer has substantial resources and highly experienced counsel.

The Federal Court of Appeal also indicated that another significant element of the Canada Labour Code’s unjust dismissal provisions is that it is supposed to provide federal employees with similar protections to those enjoyed by unionized workers. The notice period and reasonable notice are critical factors in determining fair compensation for unjust dismissal. The Court of Appeal indicated that in unionized contexts, workers typically do not have to pay out-of-pocket expenses for legal representation, as such representation is typically provided to them via their union and funded through union dues. In order to ensure that non-unionized federal employees are not in a substantially worse position as compared with their unionized counterparts, it makes sense that unjustly dismissed federal employees have the opportunity to recover their legal costs. Without this opportunity, the purpose of the Canada Labour Code’s unjust dismissal provisions would be substantively thwarted. The Federal Court of Appeal aptly recognized this difficulty, hence overturned the decision of the Federal Court, and upheld the initial arbitrator’s award. In the end, the Court of Appeal’s decision provided Ms Amer with an award of substantial indemnity costs, ensuring that she was able to meaningfully pursue her rights under the Canada Labour Code, including severance pay.

The Employment Insurance Act provides an account of what circumstances can result in disentitlement to collect employment insurance (EI). Disentitlement can occur when a worker voluntarily leaves their job. According to the Employment Insurance Act, voluntarily leaving employment includes situations where:

• Workers refuse employment offered as an alternative to an anticipated loss of employment;
• Workers refuse to resume employment; and
• Workers refuse to continue their employment after the employer’s work, undertaking, or business has been transferred to another employer.

To qualify for regular EI benefits after quitting, an individual must demonstrate ‘just cause’ and provide evidence that all reasonable alternatives were considered before leaving.

Service Canada assesses EI applications, including reasons for quitting, evidence gathering, and approval for special situations.

There are some circumstances where a worker who has voluntarily quit their job may not be disentitled to collect regular EI benefits. If, after leaving their employment voluntarily, a worker has since been employed in insurable employment for the requisite number of hours based on their regional unemployment rate, the worker could still access Employment Insurance. In addition to this circumstance, workers who voluntarily quit their jobs may still be entitled to receive EI benefits if they have established just cause for quitting their employment.

According to the Employment Insurance Act, workers may have just cause for quitting their job if the worker had no reasonable alternative to leaving their employment regarding the following circumstances:

1. Sexual or other harassment;
2. Obligation to accompany a spouse, common-law partner or dependent child to another residence;
3. Discrimination on a prohibited ground of discrimination within the meaning of the Canadian Human Rights Act;
   • Prohibited grounds under the Canadian Human Rights Act include race, national or ethnic origin, colour, religion, age, sex, sexual orientation, gender identity or expression, marital status, family status, genetic characteristics, disability, and conviction for an offence for which a pardon has been granted or a suspension has been ordered.
4. Working conditions that constitute a danger to health and safety;
5. Obligation to care for a child or a member of the immediate family;
6. Reasonable assurance of another employment in the immediate future;
7. Significant modification of the terms and conditions respecting wages or salary;
8. Excessive overtime work or refusal to pay for overtime work;
9. Significant changes in work duties;
10. Antagonism with a supervisor if the claimant is not primarily responsible for the antagonism;
11. Practices of an employer that are contrary to law;
12. Discrimination with regard to employment because of membership in an association, organization, or union of workers;
13. Undue pressure by an employer on the claimant to leave their employment;
14. Eligibility for compassionate care benefits;
15. Any other reasonable circumstances that are prescribed;
16. Eligibility for EI benefits, including justifying the reasons for quitting.

Only Reasonable Alternative to Leaving Employment

The Federal Court of Appeal has provided some assistance in understanding the requirement for reasonable alternatives to leaving employment. The Court of Appeal in Canada (Attorney General) v. Murugaiah indicated that the primary question to consider, even before getting into the possibility of just cause for leaving employment, is whether the employee had a reasonable alternative they could exercise. Reviewing the collective agreement or employment contract to understand the protocol for handling workplace issues is crucial before considering quitting. When the circumstances exist for quitting with just cause, workers still have an obligation to pursue any reasonable alternatives to quitting. Quitting must be the only reasonable alternative considering the circumstances. In Canada (Attorney General) v. Hernandez, the Federal Court of Appeal did not allow Mr. Hernandez to collect Employment Insurance because he did not explore the possibility of changing the nature or conditions of his employment with his employer. In other words, failure to raise the concerns associated with leaving for just cause with the employer can undermine a worker’s entitlement to collect Employment Insurance. After addressing the question of whether the worker had a reasonable alternative, whether with an employment lawyer or not, the adjudicator will consider the substantive elements of the alleged just cause for leaving employment.

It is incumbent upon the employee to canvass alternatives before making the decision to quit their job if they seek to remain entitled to Employment Insurance. This can include, among other things, speaking with managers about concerns, contacting union representatives to file a grievance, communicating with a joint health and safety committee or health and safety representative, requesting transfers or accommodations, and potentially taking medical leaves. Failure to adequately pursue reasonable alternatives to leaving employment can result in disentitlement of Employment Insurance.