Employment Law: An Overview of Rights and Obligations

Employment Law: An Overview of Rights and Obligations

Peter Quinlan

Our employment is often a significant feature contributing to who we are. Many people measure success by their accomplishments in their work life. It is often more than just a means to an income.

This is why the loss of employment can be devastating. Wrongful dismissal cases have been keeping our courts busy. The common law, which is really Judge made law, treats employment as a contract. The vast majority of employment contracts are not in writing but are contracts none the less. The terms are usually recognizable such as the nature of the work and the pay for that work.

The common law however imposes a term in everyone’s contract of employment which sets out that an employer will not terminate an employee unless the employee is given reasonable notice or pay in lieu of reasonable notice. However this being the rule, it must be understood that there can be exceptions to that rule. The principal exception is that where an employer has cause for termination, reasonable notice is not required to be given. What amounts to “cause” is difficult to define. Each case depends upon the specific facts. It will be no surprise to anyone that stealing (other than insignificant items) from an employer, competing with an employer without consent to do so, being a significant disruption in the workplace, violating human rights of a co-worker or violence in the workplace would amount to cause for termination. The employer has the onus of proving cause. The legal requirement is that the behaviour represented a “fundamental breakdown of the employment relationship”.

A second exception is where the parties enter into a clearly worded contract (this one would have to be in writing) that demonstrates that the employee agreed to forego reasonable notice and agreed to accept only the statutory minimal notice period set out in the Employment Standards Act or a specified period of notice or pay in lieu of notice that exceeded that in the Act.

As a practical matter, there are three sources of pay in lieu of notice. The first is termination pay.

The Employment Standards Act defines “termination pay” as a week per year of service to a maximum of 8 weeks. An employer can either require the employee to work the notice or can provide pay in lieu of notice.

The second source of pay in lieu of notice is “severance pay” as defined in the Employment Standards Act and it is an additional week per year of service to a maximum of 26 weeks and cannot be working notice. However, severance pay is payable only if the employee has been employed for 5 years and the employer has a payroll of at least 2.5 million dollars in one of the specified periods. These are the statutory minimums and it can be seen that a long-term employee would be entitled up to 34 weeks pay (26 weeks plus 8 weeks) as a statutory minimum.

The third source of notice is the reasonable notice at common law as mentioned above. This notice includes both termination and severance pay but it is based upon a different set of factors. These are factors applied by Judges and have been repeated in countless cases but generally speaking boil down to length of service, degree of responsibility in the workplace and the age of the employee. Historically these were to add up to a genuine pre-estimate of how long it would take for the individual to find similar alternative employment. What this really means is that somebody who has been in upper management for many years is going to get a longer period of notice than somebody who has been in upper management for a shorter period of time. As well, upper managers are entitled to more notice or pay in lieu of notice than lower managers. It should be understood however that there is no specific rule that applies to everyone and it can be different in each and every case.

Wrongful dismissal simply means that an employer has terminated an employee without giving the proper amount of notice and there is not “cause” for such termination. Therefore the employee is entitled to reasonable pay in lieu of notice of termination. Of course the employer wants the notice period to be shorter and the employee wants it to be longer.

The Supreme Court of Canada reinforced the concept that employment is a contract and a breach of that contract is to be treated like the breach of any other contract. This means the damages flowing from the breach must be measured as discussed above. But, a very significant feature is that the person suffering the breach of the contract, namely the employee who has lost employment, is obliged to do his or her best to minimize the damages flowing from that breach. This means the employee must look for new employment and must be able to prove their effort at seeking new employment. It also means that their earnings in any new employment may be deducted from common law pay in lieu of notice payable by their former employer. In short, every dollar earned in a new job (one that is essentially equivalent to the former job), is a dollar that the former employer does not have to pay except that the Employment Standards requirements must always be paid. We all must understand that a failure to make a diligent search for work will result in a reduction in the notice period and therefore a reduction in the damages payable by the employer.

We must also consider the entitlements of a departed employee and the obligations of the employer over the notice period. Often this includes continuation of most benefits to which the employee was entitled including pension contributions, benefit plans and may include profit sharing.

Constructive Dismissal

This arises when an employer makes a significant alteration in the contract of employment which negatively affects the employee. This most often arises as a result of changes which result in a significant loss of income. This could include a demotion which may amount to a loss of prestige in the work place. However, constructive dismissal is hard to prove by an employee and the employee also faces the rather difficult argument that he or she ought to have remained in the workplace and earned what was being offered as a way to mitigate the damages as discussed above. Of course an employee would not be forced by the courts to return to a workplace or consider returning to a workplace in which they had been seriously abused. It should be remembered however that the Supreme Court of Canada has emphasized that mitigating the damages by staying on the job may well be required by a Court. Therefore it can be financially devastating to an employee who refuses to remain on the job.

Constructive Dismissal is a very complex area of the law and legal advice is absolutely necessary before an employee submits a resignation alleging constructive dismissal.

Unjust Dismissal

This phrase is usually used in the context of industries regulated by the Government of Canada as opposed to the Government of the Province of Ontario. This would include banks, inter-provincial trucking firms, railways and airlines. The principles of law are similar in that the need to mitigate damages is applied and the notice or pay in lieu of notice provided is arrived at in a similar way. However under the Canada Labour Code, an arbitrator does have the authority to re-instate an employee but this is not an automatic result but one depending upon the circumstances including the reason for the unjust dismissal, the relationship between the parties, whether the employer was downsizing for economic reasons or whether the employee had misbehaved in a significant way but not enough to justify termination for cause. Arbitrators are often reluctant to return these employees to the workplace.

What Amounts to Cause for Dismissal?

It is relatively rare for an employer to succeed in a termination for cause in a trial. For example insubordination is normally the subject of progressive discipline and therefore one act of insubordination would usually be insufficient to amount to cause. Dishonesty involving theft can often amount to cause but the Supreme Court of Canada requires that it be looked at in the context in which it occurred. However most employers would not be willing to keep an employee who has demonstrated dishonesty in the workplace and such behaviour usually results in a loss of employment with the only question being whether the employer has to provide pay in lieu of notice.

The amendments to the Occupational Health and Safety Act with respect to violence in the workplace and harassment, which were implemented in June of 2010, made it clear that this behaviour is unacceptable in all workplaces and is contrary to the Occupational Health and Safety Act. This is a relatively new approach to cause for termination.

A discussion of cause must also include references to intoxication whether by alcohol or drugs. These are usually safety violations in the workplace and would not be tolerated by employers. However, if they occur by reason of an addiction suffered by the employee, then the employer must do its best to accommodate that disability. This of course requires a determination as to whether there is an addiction or whether this is as a result of poor judgment.

Cause can also be demonstrated by an employer where an employee is continually disciplined but fails to heed the disciplinary measures imposed and continues with the behaviour. Progressive discipline and warnings are meant to demonstrate to the employee that continued behaviour will result in greater discipline leading to termination unless the behaviour is corrected. Employers now maintain records of such discipline and especially in circumstances where the behaviour can be classified as unsafe behaviour, termination can be the result and it may not be a wrongful dismissal.

Summary

The law is very complex. Each case is usually unique and requires investigation, assessment and an understanding of the factors that gave rise to the dismissal. These then lead to a conclusion as to whether or not the dismissal was wrongful and whether or not the departed employee is entitled to reasonable notice or pay in lieu of that notice. It is important for both employees and employers to obtain proper legal advice in order that they know their rights and their obligations and can make decisions armed with information.

The employment lawyers at Waterous Holden Amey Hitchon are experienced in advising both employers and employees and therefore can advise as to the legal consequences of steps taken and can protect those rights and the obligations for their clients. As stated above, the law is very complex as there is both statute law applying and common law applying to most situations.

Discrimination

The lawyers in this firm can assist in matters of employment discrimination which generally speaking are violations of the Ontario Human Rights Code. They can include harassment in the workplace which is now included in the Occupational Health and Safety Act.

Privacy Rights

There have been some recent developments in the law regarding privacy rights of employees. In particular, the courts are now willing to entertain a claim for damages arising out of the breach of one’s privacy rights. Privacy statutes govern but common law, made by Judges, appears willing to treat such a breach as a tort now called intrusion upon seclusion.

Occupational Health and Safety

Occupational Health and Safety is a highly specialized area. Familiarity with the Act itself and with the consequences of safety violations is critical in each workplace. However the onus is on the employer to ensure training of employees and to ensure verification of the training. Employers must be vigilant in overseeing safety procedures in the workplace.

Resignation

An employee of course is free to resign or to quit. To do so means that the employee gives up all of his or her rights to any compensation for leaving the workplace. However, if the resignation occurred by reason of harassment, bullying, violence or discrimination, that may be interpreted as constructive dismissal and the employee would still be entitled to damages.

Disability Benefits

A frequent source of difficulty for employees is with respect to long term disability benefits (LTD) arising due to disabilities. Many employers have insurance plans however difficulties with insurers require legal expertise and the employment lawyers at Waterous Holden Amey Hitchon have been involved in many of these.

Written Employment Contract

Some employers and employees, prefer to have written employment contracts that set out the notice to which an employee would be entitled if terminated. The common law can be altered by means of a written employment contract. This means that the common law pay in lieu of notice can be fixed by contract or even eliminated by contract. The requirements of the Employment Standards Act however cannot be altered by contract as the Act prohibits contracting out of an Employment Standard.

Mediation

Lawyers are familiar with using the courts to resolve disputes. However, many employment disputes lend themselves to resolution by mediation. Employees and employers want resolution and a good mediator can assist the parties in reaching an agreement which usually leaves both unhappy but it brings the matter to a conclusion.

Injunctions

Both employees and employers can face an injunction application before the Superior Court of Justice. These usually arise in the context of a departing employee who sets up a business in competition with his former employer. The new business then seeks work from the contacts the departing employee had. The employer’s response is to seek an injunction to protect the employer’s business with those customers. Our law certainly allows departing employees to go into business however there are a number of restrictions, whether in a contract between the employer and employee or as a matter of law, the breach of which can give rise to an injunction. The lawyers at Waterous Holden Amey Hitchon have been involved in many such injunctions whether acting for employees or employers.

Non-Competition and Non-Solicitation

This gives rise to a discussion of restrictive covenants being non-competition, non-solicitation or non-disclosure of information. An employer is entitled to protection of certain kinds of information. This can be in a contract or can be as a matter of common law. However it should be understood that most non-competition provisions are not enforceable as a matter of public policy except in very special circumstances. Our courts however are prepared to enforce non-solicitation clauses. These are clauses in a contract in which the employee agrees not to solicit business from customers he or she dealt with during employment with the former employer with whom the contract is made. These usually are restricted in geographic scope and in length of time.

Harassment

Employers can encounter allegations of harassment whether it be of a sexual nature, bullying, creating a toxic environment or even violent confrontations. It is critical for the employer to have an independent investigation and our lawyers can certainly arrange or conduct such investigations.

Employees also encounter harassment whether it be by fellow employees or by superiors in the workplace. The law in Ontario requires a workplace free of harassment however human nature is such that this still goes on. An employer can only deal with employees who harass others, if the behaviour is reported to the employer. One must also distinguish discipline from harassment and the right of the employer to be in control of the workplace.

Negligent Misrepresentation

Employees can also have a cause of action in negligent misrepresentation or negligent hiring if there is a representation of the kind of work to be performed but upon commencing the job the work is entirely different or the job ends far sooner than anticipated.

Employment Standards

Ontario’s Employment Standards Act sets out the minimum requirements for a workplace in Ontario. We at Waterous Holden Amey Hitchon have extensive experience in dealing with Employment Standards issues which may involve payment, vacations, vacation pay, holiday pay and leaves whether they be pregnancy, parental, personal, emergency or family medical in nature.

Human Rights

Rights are defined in the Human Rights Code in Ontario. Not all rights are perceived as Human Rights. Only those defined by Statute fall into that category. This area of the law is similar to discrimination. These rights are normally enforced before the Human Rights Tribunal however the Superior Court of Justice does have jurisdiction to deal with damages for breach of human rights as long as there is another cause of action being dealt with by the court.

Labour Relations Board

Waterous Holden Amey Hitchon is one of the few law firms in Brantford with lawyers willing to attend the Labour Relations Board in Toronto. The Labour Relations Board deals firstly with union matters but it is also the place that deals with the final appeal of disputes under the Employment Standards Act. In that regard, Employment Standards officers can make orders and disputes ultimately find there way in front of the Labour Relations Board.

However, regarding union matters the Labour Relations Board determines whether a union will be certified in a place of employment and will resolve disputes over the certification process, unfair labour practices, strikes and does assist in resolution of the finalization of collective agreements.

In short, Waterous Holden Amey Hitchon can handle virtually any kind of employer/employee issue and if it cannot for any reason, the lawyers have working relationships with law firms who can.

Communications on this website are intended for information purposes only and do not constitute legal advice or an opinion on any issue. Readers are cautioned against making any decisions based on this material alone. The lawyers of Waterous Holden Amey Hitchon LLP would be pleased to provide additional details or advice about specific situations.