Author: Stacey R. Ball

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.

Workers in Ontario are entitled to meal breaks while at work. Under Ontario’s Employment Standards Act, a worker is prohibited from working more than 5 consecutive hours of work without a 30-minute meal break. Workers can agree to take multiple shorter break periods instead of one 30-minute break, but the total break period time must be 30 minutes. Workers should be aware that the ESA does not require these eating periods to be paid by the employers. Nevertheless, under employment law, workplace contracts can provide for specific break time. If an employer attempts to remove a contractual term like paid break time, this could result in significant changes in compensation, and workers may be protected under workplace constructive dismissal laws.

Role of an Electronic or Written Agreement

Constructive dismissal may apply if significant changes to the terms of employment are made by the employers. If a worker’s contract allows for paid break time during consecutive work hours, but the employer attempts to take this away, this could result in a significant change of employment, and indicate an intention of the employers to no longer be bound by the contract of employment. According to the Supreme Court of Canada in Potter v. New Brunswick Legal Aid Services Commission, constructive dismissals occur when a contractual term is breached, and such a breach is sufficiently serious. This includes things like a change in compensation or even hours of work, both of which would apply to the removal of a paid eating period at workplace. However, a minor breach of the employment contract may not justify a constructive dismissal; nevertheless, many small changes as opposed to one big change may also indicate the employer’s intention to no longer be bound by the contract of employment.

Breach of Entitlements

While workers are entitled to break times every 5 consecutive hours at work, many workers have unfortunately been compelled by employers in Ontario to work during their breaks. The Ontario Labour Relations Board has held that workers working into their coffee breaks are entitled to compensation for the time spent working. In Faucher v. 1078845 Ontario Inc., the OLRB held that Ms. Faucher was compelled by her employer to work past her eating periods and was not appropriately compensated for her labour. Consequently, the Board ordered Ms. Faucher to be paid for the time she worked during her eating period. This can also extend into issues of overtime pay. If an employer compels a worker to work past the eating period they are entitled to, the worker may work long hours, enough to earn overtime pay. In Kimberley Hadfield v 1529150 Ontario Inc. o/a The Staffing Connection and Director of Employment Standards, the OLRB acknowledged Ms. Hadfield frequently worked through the break time she was entitled to, and in doing so worked past the consecutive hours of overtime threshold. Consequently, the OLRB ordered that Ms. Hadfield be paid the outstanding wages she was owed on an overtime basis. The OLRB can therefore order employers to pay workers their unpaid wages if they breach the eating period entitlement.

When Serious Interference of an Employment Lawyer is Needed

Some workers may be hesitant to raise concerns about break time being skipped for fear of reprisal by their employers. However, workers should be aware that they are protected under the ESA from reprisals for exercising or attempting to exercise their rights under the act. In 9727868 Canada Inc. operating as Plug & Play Solutions v. Justin McMurray-Zitman, the OLRB held that Mr. McMurray-Zitman was terminated in reprisal for attempting to exercise his rights to a meal break. The board held that if any part of the decision to terminate the worker was made because the worker was trying to exercise their rights under the ESA, like an employee exercising their entitlements to coffee breaks, then the decision to terminate is tainted and in breach of the ESA. Furthermore, the employers must prove that the decision to terminate the employee was not made due to a worker’s attempt to exercise their rights. Failure to do so will be viewed by the OLRB as termination in reprisal against a worker. In this case, Mr. McMurray-Zitman was provided with compensation for the employer’s breach of the ESA. More generally, an employer is prohibited from threatening a worker with termination or discipline or terminating an employee or disciplining a worker in response to the worker attempting to exercise their rights under the ESA. In such circumstances, the board has the power to order the worker to be compensated or even reinstated because their rights have been breached.

In Ontario, workers have the right to take a leave of absence from work for personal illness. Under Ontario’s Employment Standards Act, a worker who has been employed by an employer for at least two weeks is entitled to take a leave of absence without pay due to personal sickness, illness, or medical emergency which can be proven by healthcare professionals. Currently, the ESA limits sick leave to three (3) unpaid days off from work per year. Workers seeking to take the time off under the ESA must inform their employer about it, either before they take the sick days, otherwise the worker must inform their employer as soon as possible that they will be taking the leave of absence.

Is Doctor’s Note a Reasonable Evidence?

Under the ESA, employers can require workers to provide evidence when taking sick leave. However, employers can request a sick note written by licensed healthcare providers. The evidence must be reasonable in the circumstances. Labour Arbitrators have provided some guidance regarding what constitutes reasonable evidence when requesting leave with a sick note. In Ontario Energy Board v. Society of United Professionals, Arbitrator Surdykowski held that employers are entitled to notice of time off with medical notes and the expected duration of the absence for legitimate work force management and absenteeism control purposes. According to Surdykowski, the onus is on the worker to establish that they were taking time off appropriately and must provide satisfactory explanations and reasonably required documentation for their leave. However, Surdykowski also states that employers are only entitled to the least degree of a worker’s private medical or other information necessary for the purpose. The primary question is what information is reasonably required for the circumstances of the sick leave. The arbitrator establishes that employers are entitled to know only that the worker is unable to work due to illness or injury, the expected return date, and what the worker can or cannot do. The length of the expected leave is an important consideration regarding what sort of medical evidence will be reasonably required, and longer leaves of absence due to sickness may warrant employers requiring updated or additional medical information.

Arbitrator Surdykowski continued by establishing a general standard for workers providing medical certificates and other evidence to their employers. So long as a medical document has a qualified doctor or regulated healthcare provider certifying the worker is unable to work for a generally described medical reason, and the duration of the absences is also estimated, the document will generally be sufficient to justify employees absence. Employers have no immediate right to a worker’s medical history, diagnosis, symptoms, treatment plan, or prognosis other than the doctor’s notes and expected return date to work. If employers want to have access to these particulars, they must first demonstrate a legitimate need for such information before they can compel workers to disclose these details. There are significant constraints around what details and evidence an employer can require from workers regarding sick notes. However, the Arbitrator’s decision also indicates that workers should provide reasonable information regarding doctor’s sick note.

Administrative Rules for Termination

Failure to provide reasonable evidence regarding sick notes could result in your employer conducting a workplace investigation. As stated above, workers have the onus to establish time off work is justified rather than the result of wanton absenteeism. Consequently, it is prudent for workers to provide reasonable information regarding their sick leave to avoid any allegations of unexplained absenteeism. Nevertheless, while absenteeism may justify termination for cause in limited circumstances, the Ontario Court of Appeal in Minott v. O’Shanter Development Company Ltd., consistent with the Supreme Court of Canada’s later ruling in McKinley v. BC Tel, held that missing a day of work unexplained will rarely justify just cause in the absence of prior warnings, especially if the worker has long worked for the employer.

Workers who are terminated after taking a leave with a doctor’s note, may have recourse to the anti-reprisal provisions in the ESA. Workers are protected from termination when they exercise or attempt to exercise their rights under the ESA. The Ontario Labour Relations Board in 2325671 Ontario Limited v. Susan Benson has held that if any element of a worker’s termination or discipline was due to the worker seeking to exercise their rights under the ESA, this constitutes reprisal. In other words, if a worker taking time off with doctor’s notes was in any way related to their termination or discipline, this would constitute reprisal under the ESA. Since sick note leave and other leaves of absence are covered under the ESA’s anti-reprisal provisions, the Board in Guy Morin v. Huawei Technologies Canada Co. has made it quite clear that termination for exercising or attempting to exercise these rights constitutes reprisal. In Haley Thompson v. 580062 Ontario Inc. (c.o.b. Slainte Irish Gastropub) the Board held that reinstatement with backpay is the presumptive remedy for the termination in reprisal, otherwise the worker can be provided monetary compensation. Overall, workers have a strong remedy when they exercise or attempt to exercise their rights under the ESA and are terminated or otherwise disciplined.

When terminating workers, employers have an obligation of good faith and fair dealing. In Wallace v. United Grain Growers Ltd., the Supreme Court of Canada aptly outlined that this obligation demands employers be candid, reasonable, honest, and forthright with their employees. Additionally, this demand also precludes employers from engaging in any conduct that is unfair or in bad faith, including conduct that is untruthful, misleading, or unduly insensitive. With this breakthrough, workers could receive extended damages through aggravated, moral, and punitive damage awards for employer misconduct in the manner of dismissal. Nevertheless, the generalized rule as outlined in Wallace requires a case-by-case articulation to determine what sort of conduct actually breaches the established rules.

Actual Breaches of the Obligation of Good Faith and Fair Dealing in the Manner of Dismissal

In a recent Ontario Superior Court Case, Koshman v. Controlex Corporation, Mr. Koshman himself was terminated by Controlex Corporation at age 69, after working for 18-and-a-half years, as a Vice President of the company, making $228,000 per annum. Mr. Koshman was on track to retire at 75 yet was terminated without cause. The court conducted a focused analysis of Mr. Koshman’s common law reasonable notice period and ruled that he was entitled to 24 months’ notice. On top of this robust notice period, Mr. Koshman was also awarded both aggravated and punitive damages. The court ruled that Mr. Koshman was entitled to $50,000 in aggravated damages for Controlex’s misconduct in the manner of dismissal. The misconduct outlined in this case constitutes a veritable litany of breaches of the obligation of good faith and fair dealing in the manner of dismissal. When Controlex acquired a new principal, Mrs. Dent, she carved a warpath against Mr. Koshman. She:

• Advised Mr. Koshman that he would no longer wield signing authority, which was a key component of his job;
• Personally visited Mr. Koshman’s customers, advising them not to deal with him, and criticized his character and honesty, telling some of them that he had been terminated prior to his termination;
• Offered Mr. Koshman’s job to a subordinate prior to his termination;
• Failed to meet with Mr. Koshman to discuss any concerns she may have had;
• Ostracized him from management duties;
• Provided only 2 weeks’ notice;
• Refused to pay Mr. Koshman’s accrued vacation pay;
• Terminated him by way of letter sent by courier;
• Further insinuated to clients that her husband, Mr. Dent, the former principal of Controlex Corporation, had been murdered and that Mr. Koshman was involved;
• Made defamatory comments about Mr. Koshman being dishonest; and,
• Baselessly alleged in court that Mr. Koshman had breached fiduciary duties.

Each of these acts of misconduct could satisfy the test for aggravated damages. Based on the entirety of the above, the court ruled that Mrs. Dent took significant steps to destroy Mr. Koshman’s reputation, and thus warranted an award of $50,000 in aggravated damages. But the court did not conclude the award of damages after the veritable litany of misconduct perpetrated against Mr. Koshman. In addition to the aggravated damages award, Mr. Koshman was also awarded a separate $50,000 as punitive damages. The court outlined that punitive damages are to be awarded only for the purpose of punishing defendants for misconduct, and only after all further damages have been awarded. Mrs. Dent embarked on a malicious, scorched earth campaign against Mr. Koshman, undermining the plaintiff’s ability to perform his job functions, attempting to destroy his reputation with customers and clients, making defamatory statements about him, and accusing him of criminal conduct and dishonesty. As if the laundry list of misconduct discussed regarding aggravated damages was not enough, during trial, Mrs. Dent:

• Pursued a baseless counterclaim against Mr. Koshman alleging termination for cause and seeking repayment of the eight weeks of severance paid out to Mr. Koshman since termination;
• Caused Controlex to default on a court order to appoint new counsel;
• Caused Controlex to abandon its defence of the proceeding;
• Chose not to attend the trial; and,
• Refused to communicate with the court or Mr. Koshman’s counsel.

It is well established that misconduct during the course of litigation can justify an award of extended damages, as held in the case of Galea v. Walmart Canada Corp. The court in Koshman carries this ruling even further, extending such misconduct beyond engaging in attrition to include refusals to participate in the hearing and stonewalling. At every stage of the manner of dismissal, the employer engaged in malicious misconduct against Mr. Koshman, whether before termination, during termination, and after termination. The aggravated and punitive damages awarded to Mr. Koshman indicate the obligation of good faith and fair dealing in the manner of dismissal are not trifling aspects of Ontario’s employment law.

Time Theft in Arbitral Jurisprudence

The phrase “time theft” itself is particularly loaded to paint the alleged misconduct of a worker as exceptionally severe and associate their alleged misconduct with criminality. However, this sort of language framing has been targeted by arbitral jurisprudence on the matter. In Grand & Toy Ltd. v. United Steelworkers of America, Local 9197 (Natal Grievance), Arbitrator Paul Craven stated that the phrase “time theft” presumes the time belongs to the employer and is being misappropriated by the worker. Instead, Arbitrator Craven stated that the time actually “belongs” to the worker, along with the worker’s strength, intelligence, skills, and innate capacities. In the employment context, the worker undertakes to accept the employer’s direction for the duration of employment in exchange for wages and subject to the terms of employment. The time still belongs to the worker, but the worker agrees to use that time under the employer’s direction. In this context, Arbitrator Craven indicates that “time theft” is more closely related to the industrial offence of insubordination rather than theft. Furthermore, Arbitrator Craven held the company’s particular rule against “time-theft” in this case was inconsistent with just cause provisions in the contract, as it prescribed termination for any instance of “participating in activities on company time that do not constitute company business”. Ultimately, Arbitrator Craven upheld the long-established standard of progressive discipline rather than immediate termination in response to violations of the “time-theft” policy.

Arbitrator Craven’s account was adopted by the Ontario Labour Relations Board in International Union of Elevator Constructors, Local 50 v. Otis Canada. In this respect, “time theft” may not necessarily involve an outright refusal to obey a direct order from an employer, but rather is a form of “culpable inefficiency” in the face of well-understood performance expectations. Indeed, there are similarities between such behaviour and the long-standing practice among workers referred to as soldiering. In a unionized context, collective soldiering, or deliberate reduction of productive output, can be considered an unfair labour practice under Ontario’s Labour Relations Act unless it is done while workers are in a legal strike position. It is very important how time theft is categorized and understood, lest the language be used to imply that a worker’s time, and hence their life, is owned by their employer throughout the duration of their employment. This simply is not the case. Characterizing time theft as theft rather than as insubordination results in a misapprehension of the offence and an overly severe response to the misconduct.

Insubordination and Dismissal

While “time theft” may be more akin to insubordination, both Ontario law and Canadian law more broadly consider insubordination misconduct justifying discipline by employers. It is well established that workers can be subject to discipline for insubordination in an employment context. However, it is also well established that the discipline must be a proportionate response to the worker’s misconduct. If an employer attempts to terminate a worker for cause because of “time theft”, the degree of discipline may be too severe to warrant termination for cause based on the circumstances. As outlined by the Supreme Court of Canada in McKinley v. BC Tel, dismissal for cause is only warranted in the most severe circumstances. Instead, employers are expected to utilize progressive discipline to temper and manage worker misconduct prior to termination, unless the misconduct is so aggravating and severe as to warrant immediate termination. If the employer fails to apply progressive discipline, the termination for cause may be unduly severe. If the worker after being subject to progressive discipline continues to engage in the misconduct, in this case, insubordination, the employer may be able to justify for-cause termination.

In the case of “time theft” insubordination, a minor instance of this occurring may be too meagre to warrant termination for cause. However, several repeated instances may cumulatively justify termination without notice, as outlined by the Ontario Superior Court in Daniels v. Canadian Gift and Tableware Assn. While minor and individual instances of such insubordination may not warrant termination for cause, repeated and cumulative instances can justify such termination.

Discussions of “time theft” have become more prominent in the wake of the COVID pandemic and remote work. Employers in Ontario are legally permitted to monitor workers remotely via electronic monitoring systems. Ontario’s Employment Standards Act entitles most workers to have their employer provide a written policy on electronic monitoring and make such a policy available and known to them. The policy must also outline how and in what circumstances the employer can monitor the worker, and the purposes for which information obtained via electronic monitoring is used. Nevertheless, employers are not prohibited from electronically monitoring remote workers, and may use such monitoring information to construct accounts of “time theft”. However, workers and employers alike should be aware of the limitations of algorithmically constructed accounts of “time theft”, which may result in inaccurate accounts of time spent on tasks due to algorithmic modelling issues.