FAQs

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The Importance of a Employment Contract

Having an Employment Contract...

Firing / Termination

The obligations of an employer to an employee upon termination of an employee's employment are generally governed by two bodies of law :

1) Statutory / Employment Rights - Each province has enacted legislation setting out minimum mandatory notice and severance entitlements based on the individual employee’s length of service. There are additional entitlements based on the size of the Employer’s payroll and the number of employees terminated at the same time . These entitlements are available to employees that have not committed acts of “ willful misconduct “ ( which the employer must prove ) and are not subject to any off set for income gained through alternate employment . In addition , an Employer is obligated to pay all accrued Holiday Pay , accurately report relevant information for Unemployment Insurance and Tax purposes and effectively process all disability /benefits insurance claims that have been submitted during the statutory notice period .

2) Common Law or Contractual - In all Canadian Provinces ,in the absence of cause , every dismissed employee is entitled to a reasonable notice of termination or compensation for loss or remuneration and/or benefits as a result of a contract of an indefinite employment which can be written or more typically unwritten in nature . The period of notice is assessed by a Court based on age , length of service and the character of employment. There are many other factors which affect this determination including the manner of the dismissal, the employee’s health and the availability of alternative employment . There are no monetary limits to these entitlements although there is a set off for statutory amounts already received and income from alternative employment or a business. The employer is also required to accurately represent the reasons for the dismissal to all third parties including prospective employers.
 

Employee Resignation

Generally , a voluntary resignation is considered to be a bar to an action in wrongful dismissal . However, in Canada , the preponderance of leading Court decisions dealing with the issue have stated that in order for the resignation to be effective it must be “ clear and unequivocal “ . In addition , it must not be obtained as a result of a false representation , deceit or duress. Many Courts in Canada have also said that an Employee delivering such a resignation given in the “ heat “ of an exchange with his employer , must be given the opportunity of a “cooling off” period to reconsider and withdraw the resignation , even if it is accepted . Of course , a resignation cannot be initiated by the Employer nor deemed to operate as a result of some implied conduct on the part of the employee. However , to have “ repudiated “ the contract of employment by abandonment. Prudent employees should notify their employers of their whereabouts during extended leaves of absence always record the message in writing .
 

Constructive Dismissal

What exactly is constructive dismissal?

In the leading case of Farber v. Royal Trust , the Supreme Court of Canada gave a very expansive and definitive characterization to constructive dismissal that is binding on all Canadian jurisdictions. Simply put it is any act committed unilaterally by the employer that materially alters the nature of the employment agreement .

Constructive dismissals take on three major forms

1 ) a substantial change in the employees remuneration and/or benefits ( generally considered to be in excess of a 10% variance) with immediate effect

2) a change in an Employees duties and responsibilities that an employee would find humiliating and/or cause an undermining of his ability to fulfill his duties.

3) the creation of a “toxic “ or insecure workplace in which the employee is harassed , humiliated and threatened on a consistent basis such that his/her employment has been rendered devoid of security.

There are literally hundreds of recorded examples of such conduct in the case law although it is always the Employee’s onus to prove that he /she has been constructively dismissed. In recent years the Courts have increased the “tolerance “ level of the kind of conduct the employee must endure before he /she can consider the employment relationship as being repudiated, allowing a voluntary leaving that preserves the right to sue for constructive dismissal . An employee can be found to have condoned the change by a sustained period of silence on the issue . A prudent employee must immediately ( and in writing) protest a significant change in their employment which prejudices their interests. However, the Courts will be very intolerant of any significant change that is imposed without precedent , notice or justified business reasons as not passing the “smell test “ of a bone fide human resources decision .
 

Wrongful Dismissal

Job Loss? What exactly is wrongful dismissal?

An employee who is wrongfully dismissed without cause can expect significant protection from Canadian Courts who recognize that the employer must provide income/benefits maintenance during a reasonable period of notice that in theory would provide an opportunity to seek out comparable alternative employment. Similarly, Courts will provide compensation only during the period of income loss.

Duty to Mitigate

What does duty to mitigate mean?

The heavy burden that is placed on employers to treat these employees with fairness is counterbalanced by the employee’s duty to mitigate, or simply put: to exercise diligent efforts to search for employment. In Canada an Employer can attempt to argue that an Employee has lost his/her right to income protection by proving that the Employee has failed in this duty.

However, there is a heavy burden: an employee must be shown to have been unreasonable in all respects relating to the job search: commonly there is an attempt to demonstrate that the job search is too narrow in space and income requirements. This is a difficult strategy especially if the employee can show that he /she has considered all reasonable opportunities/job resources and is willing to relocate. The argument is especially doomed to failure if the Employee can show that he has not received the assistance of a positive reference letter or outplacement counseling from the employer who is generally seen to be trying to benefit from its own wrong.
 

Other Legislation Impacting the Employment Relationship

What other legislation (federal and provincial) impacts upon the employment relationship?

Federal:

Canadian Labour Code
Canadian Human Rights Code
The Public Services Act
Employment Insurance Act
The Income tax Act

Provincial:

Employment Standards Act
Ontario Human Rights Code
Ontario Labour Relations Act
Workplace Safety and Insurance Act
Occupational Health and Safety Act
Wages Act
 

Health Insurance

How do LTD and STD work in a termination?

Wage indemnity payments can be claimed In the event the individual suffers a major disability that he or she would normally be entitled to during the period of employment, which is usually inclusive of the period of statutory notice. In certain circumstances there could be a claim for loss of disability benefits to the extent of the continuation of the disability which may be concurrent with the Notice /Severance period.
Although each group LTD policy can vary, benefits are usually provided to the monetary limit of coverage, during the first two (2) years if the employee cannot fulfill the duties of their own occupation. To receive further benefits until age 65, the employee must be so disabled that he/she cannot perform the duties of any occupation that their training, education and experience would normally allow them.
Regular employee benefits such as Health Dental and Prescription benefits are sometimes provided in the event that the Insurer does not provide waiver of premiums during the disability period. Unless the employee has directly financially contributed to the premiums during the employment (usually through payroll deductions). Any set off is usually deemed in favour of the Insurance provider
 

Workers' Compensation

What is Worker's Compensation and how it affects my termination?

Workplace compensation provides compensation for work related accident/illness to employees who have received healthcare and have lost time or wages from work. An employee cannot collect more than one wage benefit during the period of notice. With the exception of minimum statutory notice/severance and amounts paid by WSIB would be set off. Usually in the employers favour.

However, for those Employers who have 20 or more employees, there are additional compensation payments and penalties available to a Worker who is terminated within six (6) months to two (2) years if the Employer fails to accommodate, or terminates the employee upon return from a WSIA injury.
 

Employment Insurance

Does EI affect my claim against an employer?

Yes, the Employment Insurance Act requires that you repay all unemployment insurance benefits received during the period of notice procured from your former employer. However, Federal Law permits the deduction of all legal fees incurred as a result of our efforts to obtain your requisite notice. Furthermore, if you should remain unemployed at the conclusion of your notice period, the Unemployment Insurance Commission will "top up" your benefits for the equivalent of the severance obtained.