Hiring Employees In Ontario, Canada | Navigating the Employment Law Waters

Jul 27, 2012

Hiring Employees in Ontario, Canada

If you are thinking about hiring employees in Ontario, Canada here are five issues you’ll need to consider:

1.    Do federal or provincial laws apply?

About 90% of Ontario employees are governed by provincial laws.

Federal laws apply to employees who work for federal undertakings such as the federal government, banks, and telecommunication companies.

2.    What provincial laws apply?

There are several Ontario employment statutes including

–       the Employment Standards Act which sets out numerous minimum standards including hours of work,  minimum notice of termination, and severance pay;

–       the Human Rights Code which prohibits employment discrimination on 16 prohibited grounds such as sex, race, sexual orientation, and disability;

–       the Occupational Health & Safety Act  which imposes numerous safety obligations on, among others, owners, directors, and employers;

–        the Workplace Safety & Insurance Act which determines compensation for workplace injuries;

–       the Pay Equity Act which mandates equal pay for work of equal value; and

–       the Accessibility For Ontarians with Disabilities Act which requires employers to take measures to accommodate people with disabilities

3.    What judge made laws apply?

There are many legal proceedings that an employee can bring against his or her former employer including

–       a wrongful dismissal action if the employer did not provide the employee with “reasonable notice of termination. Damages are generally up to 24 months remuneration.

–       a no cost complaint under the Employment Standards Act where orders cannot generally exceed $ 10 000, or under the Human Rights Code where damage awards are theoretically unlimited.

–       an action in the courts for violating an employee’s privacy rights (i.e. the tort of the inclusion upon seclusion.

4.    What laws apply to unionized employees?

The laws mentioned above apply to both union and non-union employees.

About 28 % of Ontario’s workforce is unionized.

The process for unionizing an employer is set out in the Ontario Labour Relations Act. There is a different labour relations regime for the construction industry. Generally, a union files a written certification application, the employer has two days to respond, and an employee vote can be scheduled within five days of the union application.

5.    How does one navigate Ontario’s Employment Law waters?

There are numerous free on-line resources, particularly from the Ontario Ministry of Labour.

There are scores of employment law lawyers in Ontario particularly in the Greater Toronto Area.

Some employment law firms offer complimentary seminars on different employment law issues. In addition, a number of employment lawyers tweet and blog on employment law issues.

If you have any employment law questions, please call us at 1–888-640-1728 or email us at [email protected]. You can follow us on twitter (@MacLeodLawFirm) or subscribe to our employment law blog at www.macleodlawfirm.ca/employers 

There are many ways to attack the termination clause in an employment contract. 

I am now surprised if employee counsel does not claim that their client’s  termination clause is not legally enforceable - usually because the termination clause does not allegedly comply with the Employment Standards Act.

This blog considers a case, McKercher v Stantec Architecture Ltd., 2019 SKQB 100, where an employee successfully attacked the termination clause in his contract because he did not explicitly agree to it after being promoted. 

The Facts

In 2006, Mr. McKercher commenced employment as a staff architect. The termination clause in his employment contract stated: 

Termination other than for cause will be with notice or pay in lieu of notice, based on your length of service. If the Employer terminates your employment for other than just cause you will receive the greater of:

  1. a)   Two weeks notice or pay in lieu of notice during the first two years of employment increasing by one week for each additional completed year of employment to a maximum of three months notice or pay in lieu of notice.

      or

  1. b)   The minimum notice of termination (or pay in lieu of notice) required by applicable statutes.

Eleven years later, when Mr. McKercher was employed as a Business Centre Sector Leader, his employment was terminated. The employer paid him the three months termination pay he was owed under his employment contract.

 

Another way to attack a termination clause: What is the changed substratum doctrine?

An Ontario judge in a 2012 case, MacGregor v National Home Services, 2012 ONSC 2042 (CanLII), described this legal doctrine as follows: "The changed substratum doctrine … provides that if an employee enters into an employment contract that specifies the notice period for a dismissal, the contractual notice period is not enforceable if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed."

 

The rationale for this doctrine has been described by one judge, Schmidt v AMEC Earth & Environmental Ltd., 2004 BSCS 2012 (CanLII), as follows: "In my view, it was incumbent on the defendants to advise Mr. Schmidt that they intended to continue to rely upon the termination provision set out in the Agreement when substantial changes in his employment occurred. This would have allowed him to consider the matter and to negotiate for other terms. If the defendants wished to continue to rely on the termination provisions there ought to have been a ratification of the provisions as the nature of Mr. Schmidt’s employment changed."

 

Decision

The judge hearing this case relied on the following factors when deciding not to enforce the termination clause in the employment contract: ”...there is no evidence that (the employer) made it clear to the (employee) that the notice of termination provisions were intended to apply to the positions to which he was promoted. The employment agreement contains no express wording to this effect, nor does it contain any wording to support the inference of such an intent. Further, and in keeping with the analysis in Schmidt, the Court received no evidence that, as it promoted the plaintiff, SAL reasserted its understanding and expectation that the notice of termination limit would remain in effect.”

 

Lesson to be learned:

An employer should make it clear that the termination clause in an employment contract applies when an employee is promoted. This expression of this intent should be in writing and should be clear and unambiguous. I recommend that an organization’s employment be reviewed by an employment lawyer every year or two. If your employment contract does not address this issue then think about doing so the next time it is reviewed.

 

For 30 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.

 

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