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Posts tagged: employment standards act

Case Study: Why You Need to Periodically Review Your Employment Contract

By , October 11, 2017 9:08 am

A well-drafted employment contract is the best employment law investment an employer can make. It protects an employer from significant liability and will usually save thousands of dollars in termination costs.

An employment contract should be reviewed periodically because judges are refusing to enforce termination clauses if they are not drafted properly.

In a recent case, Covenoho v. Pendylum Ltd.,2017 ONCA 284, Ontario’s highest court concluded a termination clause was not legally enforceable because it might breach the Employment Standards Act (“ESA”) in the future.

The Facts

Joss Covenoho signed a one year fixed-term contract with Pendylum Inc. The employer terminated her agreement without advance notice when she had been employed for less that 3 months. The termination clause stated in part that the contract could be terminated before the end of the fixed-term “if the Pendylum Client to which you have been contracted terminate[s] its contract with Pendylum for your services”.

Decision by Motion Judge

The motion judge concluded that since the employee had been employed for less than three months, she was not entitled to any notice of termination. Under the ESA an employer is not required to provide any notice of employment to an employee during the first three months of employment.

Decision by Court of Appeal

The Court of Appeal reversed the motion judge’s decision and found that the termination provisions were void. It ruled that “the terms must be construed as if (the employee) had continued to be employed beyond three months; if a provision’s application potentially violates the ESA at any date after hiring, it is void”. In this case, if Ms. Covenoho had been terminated after three months of work, then the termination clause would have violated the ESA because she could have been terminated without any notice of termination (or any payment in lieu of notice) contrary to the ESA.  The court also ruled the employee was entitled to receive the salary that she would have earned for the balance of the fixed-term contract.

Lessons for employers:

1)   Employers should periodically review their termination clauses to ensure they are properly drafted and do not provide shorter notice than required by the ESA.

2)  As we have written about before, it is generally a bad idea to enter into a fixed term contract. If a fixed term contract must be used, it must include an enforceable early termination clause.

On October 16 and October 20 MacLeod Law Firm is holding seminars in Toronto and Barrie that will cover three topics. One topic is why employment contracts need to be reviewed periodically. Cases like this one is one reason but there are other reasons. Information on the seminar can be found here.

For over 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

Everything You Need to Know About Ontario’s Employment Laws

By , September 26, 2017 9:35 am

Now that I have your attention, let me outline three things you need to know.

  1. The Ministry of Labour is devoting considerably more resources to enforcing the Employment Standards Act (the “ESA”) and your organization is more likely to be inspected.

Earlier this year, the government announced it was hiring an additional 175 enforcement officers. In addition, I expect amendments to the ESA will be passed this fall by way of Bill 148 which will impose several new obligations on employers.

If your organization is inspected you will be asked, among other things, if you have: posted certain required written policies; provided employees with required training & documentation; posted certain required information in a conspicuous place; and, complied with the new obligations imposed by Bill 148. If not, then the inspector will issue orders and you must comply with these orders. If not, your organization will be subject to significant fines.

Are you ready for an inspection?

  1. About 50% of the complaints that are filed with the Ontario Human Rights Tribunal deal with disability related discrimination. In many cases, an employee claims the employer has failed to accommodate a disability. So chances are you will receive a request for accommodation at some point in time.

Responding to a request for accommodation can be extremely complicated. Failing to do so can be extremely costly.

Did you know that there is a procedural duty to accommodate and a substantive duty to accommodate?

Did you know that in some cases you have a duty to ask an employee if they have a disability?

Did you know that in some cases you have a duty to offer another position to a disabled employee?

Do you know whether or not you can require an employee seeking accommodation to see a doctor of your choosing?

Did you know that some employers are required to prepare a written individual accommodation plan for a disabled employee?

Do you feel comfortable responding to a request for accommodation?

  1. A well drafted employment contract is, in my opinion, the best employment law investment you will ever make. For various reasons it needs to be reviewed periodically.

In an era when the government is taking away management rights, did you know that an employment contract can add to your management rights?

In an era when courts are refusing to enforce termination clauses (and other clauses)  in employment contracts, did you know that you need to periodically review your contract to make sure it doesn’t need to be amended?

When the government imposes new obligations on employers such as the ones that are contained in Bill 148, did you know that you need to review your employment contract to make sure it complies with the ESA? For example, if your contract states that an employee receives two weeks vacation each year then this clause will need to be changed if one section in Bill 148 becomes law this fall.

The MacLeod Law Firm is not in the seminar business. I believe these topics are so important, however, that I am holding a seminar in Toronto on October 16th and in Barrie On October 20th to discuss them.

For more information about the seminar, click here.

For over 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

Employer Alert: Ontario Government Moving Quickly to Introduce Employee Friendly Changes to the Employment Standards Act

By , June 26, 2017 10:02 am

The Ontario government is quickly moving Bill 148 through the provincial legislature.

Some Proposes Changes to the ESA

As discussed in a previous blog, Bill 148 proposes changes to the Employment Standards Act (the “ESA”) including a $ 15 minimum wage by January 1, 2019, an additional week vacation after 5 years service, and two paid personal emergency leave days for absences caused by, among other things, illness and bereavement leave. In addition, if Bill 148 becomes law an employer would no longer have the right to ask an employee to provide a medical note to verify an illness.

Public Hearings to Consider Proposed Changes

On June 1, 2017 Bill 148 was ordered Second Reading and referred to the Standing Committee on Finance and Economic Affairs (the “Committee”).

Public hearings on Bill 148 are scheduled for June and July.

There are a number of ways you can provide the government with feedback on Bill 148’s impact on the Ontario labour market:

  • Attend one of the public hearings being held in Thunder Bay, North Bay, Ottawa, Kingston and Windsor-Essex during the week of July 10, 2017. A contact name, mailing address, phone number and email address must be provided to the Clerk of the Committee by July 4, 2017 for anyone wishing to attend the hearings during the week of July 10, 2017. The Committee’s Clerk, Eric Rennie, at 416.325.3506 or by e-mail at [email protected].
  • Additional public hearings will occur during the week of July 17, 2017 in London, Kitchener-Waterloo, Niagara, Hamilton and Toronto. A contact name, mailing address, phone number and email address must be provided to the Clerk by July 4, 2017 for anyone wishing to attend the hearings during the week of July 17, 2017.
  • Provide written submissions to the Committee no later than July 21, 2017 at 5:30 pm.

When Proposed Changes Expected to Take Effect

I expect these public consultations will be completed by September 11, 2017 when the legislature resumes. Bill 148 could be passed shortly thereafter and if so I expect many of the changes to the ESA will take effect on January 1, 2018.

Bill 148 is Just One of many Changes to Ontario’s Employment Laws

Ontario’s employment laws are constantly changing and Bill 148 is just one example. In recent years, the government has also introduced mandatory employee training, mandatory written policies, mandatory postings, and mandatory workplace harassment investigations.

Compliance rates are low for these new laws and the Ontario government recently announced it intends to hire 175 additional workplace inspectors and the Ministry of Labour intends to inspect 10% of Ontario workplaces each year. Bill 148 proposes increased fines for non-compliance with the ESA.

Feeling Overwhelmed?

Many small and medium size employers have a hard time keeping up with these new employment laws.

In October 2017, the MacLeod Law Firm is holding seminars in Toronto & Barrie which will discuss three important developments in Ontario’s employment laws. One of the topics we will address are the new obligations imposed on employers under Ontario’s employment laws including the likely changes to the ESA as a result of Bill 148 and what to do when a Ministry of Labour inspector comes calling.

For more information on these seminars click here.


 

For over 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Employer Alert: Ontario Judges Are Refusing to Enforce Employer Friendly Termination Clauses

By , October 24, 2016 5:36 pm

On October 18, 2016, I spoke to a room full of lawyers about the state of the law concerning the enforceability of termination clauses in employment contracts. In particular, I discussed termination clauses that attempt to limit an employee’s termination pay to the minimum notice of termination provided for under the Employment Standards Act (“ESA minimums clause”). This blog is a brief summary of my paper.

Why Does This Issue Matter?

For an employee earning $ 52,000 a year who is terminated after 25 years’ service, an enforceable ESA minimums clause could mean the difference between receiving $ 8,000 or $ 104,000 in termination pay. Conversely it means a potential $ 96,000 cost saving for the employer.

The Law

The Supreme Court of Canada has stated that an employee is entitled to receive reasonable notice of termination unless the contract of employment clearly specifies some other period of notice, whether expressly or implicitly, as long as the employee receives the minimum notice of termination set out in employment standards legislation. Further, absent considerations of unconscionability, there is nothing legally objectionable with an ESA minimums clause.

So the battleground is whether an ESA minimums clause clearly overrides the employee’s right to receive reasonable notice of termination.

Four Ways to Attack A Termination Clause

Employee lawyers have attacked the legal enforceability of ESA minimum clauses in different ways, such as:

  1. The Termination Clause is Ambiguous

In one case, a judge found the following clause to be ambiguous and therefore not enforceable:

“Employment may be terminated at any time by the Employer and any amounts paid to the Employee shall be in accordance with the Employment Standards Act of Ontario.”

In another case, a judge of the same court came to the opposite conclusion in connection with an ambiguous ESA minimums clause.

  1. The Termination Clause May Violate the ESA in the Future

In one case, an employee signed a termination clause that met the minimum standards set out in the ESA at the time it was signed but if the employee worked for a certain number of years it would no longer meet those standards. The judge found that a potential violation of the ESA rendered the clause unenforceable. Three years later a judge of the same court came to a different conclusion when interpreting a similar termination clause.

  1. The Termination Clause does not Satisfy the Minimum Requirements of the ESA

In one case, an employee signed an ESA minimums clause but it did not state that his group employee benefits would be continued during the ESA minimum notice period as required by the ESA. A judge concluded the clause was not enforceable because it did not satisfy the minimum standards set out in the ESA.

  1. The Termination Clause does not Explicitly Override an Employee’s Right to Receive Reasonable Notice of Termination

In 2016, a judge concluded the following clause was not enforceable because it did not clearly state the employee was giving up his right to receive reasonable notice of termination:

“Termination: Start date to three months: this length of service is a probationary period and the employee is not entitled to any notice or salary in lieu of notice…Three months to one year – one-week notice. One year to three years – two weeks’ notice. Three years and over – one week notice for each year of employment to a maximum of eight weeks. This policy shall be maintained in accordance with the ESA.”

This judge refused to follow an earlier decision by a judge of the same court that reached the opposite conclusion when interpreting a similarly worded clause.

Lessons to Be Learned

  1. Employee lawyers closely review ESA minimums clauses and often attack them in legal proceedings.
  1. Judges refuse to enforce ESA minimums clauses for many reasons.
  1. Because judges of the same court are disagreeing on whether termination clauses are enforceable it is extremely difficult to predict how a particular judge will interpret a particular termination clause.
  2. Employers should always require a new employee to sign an enforceable termination clause.
  1. Existing ESA minimums clauses should be carefully reviewed by an employment lawyer to determine whether they need to be amended to withstand judicial scrutiny.

For over 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

 

 

Employer Alert: Report Discusses Possible Changes to Ontario’s Employment Standards Act

By , August 11, 2016 4:04 pm

On July 27, 2016 a report  concerning possible changes to the Employment Standards Act (the “ESA”) was released following extensive public consultations.

This blog addresses 3 of the 50 or so issues that are raised in this report. Over 225 options to address these issues are contained in this report.

1.Who is an employee?

For various reasons, individuals and employers sometimes mutually agree that the individual is an independent contractor (as opposed to an employee) which disentitles the person to the protections of the ESA such as the right to vacation pay, statutory holiday pay, overtime pay, termination and severance pay. According to the report, these self-employed persons account for about 12% of the Ontario workplace. The courts and administrative tribunals have been applying the same legal test for many years to determine whether a person is an employee or an independent contractor. The authors discuss the concept of “dependent” contractor which is legally recognized in some contexts and I would not be surprised if the authors recommend that the ESA be amended so that dependent contractors are covered by some provisions in the ESA. This would have a significant impact on any employers who currently retain contractors who are financially dependent on that one employer for most of their income.

2. Who is an employer?

The ESA contains a related employer provision which requires a related employer to assume certain obligations under the ESA if the intent or effect of a corporate structure is to defeat the purpose of the ESA. Given the amount of ink that the report devotes to this topic I suspect the authors may recommend that the definition of employer be expanded and that all related employers – however defined – will be jointly and severally liable for ESA violations. This will be of particular interest to franchisors and franchisees. It may also significantly expand the reach of the severance pay provisions of the ESA if the combined payroll of two or more related employers exceeds $ 2.5 million.

3. Should some non-union employees have the right to be reinstated to their jobs if they are terminated without just cause?

This right currently exists for most unionized employees, non-unionized employees governed by the Canada Labour Code, and non-unionized employees working in Nova Scotia and Quebec. Human rights adjudicators also have the power to reinstate terminated employees and an adjudicator recently ordered an employer to reinstate a terminated employee and pay her 10 years’ back pay. In each of the jurisdictions where the right to reinstatement is found, some exemptions exist. If the ESA were amended so that employees have the right to be reinstated, then employees would have an extra bargaining chip in termination situations and I suspect settlement costs would start to trend upwards.

I suspect the authors of this report will be recommending changes to the ESA in their final report. I will keep you posted. In the meantime, the public is invited to make submissions on the issues and options raised in the Interim Report.

For over 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information provided on this blog and this website are for general information only and should not, in any respect, be relied on as legal advice or opinion. The authors make no claims, promises or guarantees about the accuracy, completeness, or adequacy of any information linked or referred to or contained herein. No person should act or refrain from acting in reliance on any information found on this website or blog, without first retaining counsel and obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant jurisdiction. These materials do not constitute legal advice and do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

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