7 Things You Should Know About The Ontario Employment Standards Act

Dec 4, 2011

The Ontario Employment Standards Act (“ESA”) imposes numerous duties and responsibilities on employers. Here are seven such obligations:

1. Record keeping obligations

Do you know that an employer must provide an employee with a statement containing certain information every pay day? Or that an employer must record an employee’s name, address, start date, and the number of hours worked each day and each week?

2. Scheduling Overtime

Did you know an employer cannot generally schedule an employee to work more than eight (8) hours a day or forty- eight (48) in a week without the employee’s agreement? Or that an employee can revoke such an agreement by providing the employer with two weeks written notice? There are exceptions to this general rule.

3. Scheduling Vacations

Did you know an employer must generally schedule employee vacations for a two-week period or a one week period unless the employee requests a shorter vacation in writing and the employer agrees? Did you know that a “use it or lose it” vacation policy does not generally comply with the ESA?

4. Scheduling Unpaid Leaves of Absence

An employer is required provide an employee with a number of unpaid leaves of absence under the ESA including:

(i)                pregnancy leave (up to 17 weeks for employees who have been employed for at least 13 weeks);

(ii)              parental leave; (up to 37 weeks for employees who have been employed for at least 13 weeks);

(iii)            organ donor leave (up to 13 weeks for employees who have been employed for at least 13 weeks);

(iv)            family medical leave (up to 8 weeks in a 26 week period)

(v)              personal emergency leave of up to 10 days each year (only employees with 50 or more employees);

At the conclusion of any of these leaves, did you know that an employer is generally required to reinstate the employee to his or her position, if it still exists, or to a comparable position, if it does not?

5. Public Holiday Pay

Did you know an employer is generally required to pay every employee public holiday pay? It doesn’t usually matter if the person works part-time, how long the person has been employed, or whether the person worked the day before or after the public holiday. Did you know that the August Civic Holiday and Remembrance Day are NOT public holidays under the ESA?

6. The obligation to provide notice of termination

Generally, an employee is entitled to up to eight (8) weeks notice of termination under the ESA. Did you know however that there are nine types of employees who are NOT entitled to receive any notice of termination under the ESA? Did you know that employees are entitled to receive longer notice periods if the employer terminates 50 or more employees within a relatively short period of time? Did you know most employers decide to provide employees with termination pay instead of notice of termination? Did you know that common law “reasonable notice” period is almost always more that the minimum notice requirements under the ESA?

7. The obligation to provide severance pay in addition to termination pay

Did you know that if your organization’s Ontario payroll is more than $ 2.5M and an employee has worked more than 5 years then he or she is generally entitled to receive one week severance pay for each year of service to a maximum of 26 weeks in addition to any notice of termination the employee is owed under the ESA? There are exceptions to this rule.

To download a copy of our Workplace Audit: 20 Areas to Consider which includes a number of questions about the Employment Standards Act, please visit our Home Page.

If you would like to discuss your organization’s rights duties and obligations under Ontario’s Employment Standard’s Act, please contact us at [email protected] or call us at 1-800-640-1728 at your convenience.

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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