Category: Employee Terminations

Companies are legally distinct from their officers, shareholders and directors. As a result of this principle, if an action is available against a company in respect of its wrongdoing, it is normally not possible to obtain a remedy against the individuals behind the company, even where they are directing the actions of the company. 

However, sometimes the application of this principle can result in unsatisfactory outcomes for those with claims, for example, when the company is bankrupt and needs funds from which to pay out the claim. Courts have sometimes been prepared to hold the individuals behind the company personally liable for the company’s wrongdoing, referred to as “piercing the corporate veil.” 

This article looks at piercing the corporate veil in the employment context, along with a recent Ontario Superior Court of Justice decision, in which an employee sought damages for termination against the company he was employed by and its owner, director and CEO. It serves as a reminder that creating a corporate structure does not necessarily prevent claims for compensation against an officer and director in their personal capacity. 

What is the corporate veil?

The directors, shareholders and officers of a corporation are not normally liable for the actions of the corporation. 

This has been a fundamental principle of company law since the 1896 English case of Salomon v Salomon & Co Ltd. The court decided that a company has a separate legal personality, and as a result, it was not possible for a company’s liquidator to claim against the company’s shareholder for debts owed to unsecured creditors.

When might it be possible to pierce the corporate veil?

Despite this general principle, courts are prepared to pierce the corporate veil in limited circumstances and hold the directing mind personally liable. 

For example, Ontario courts have pierced the corporate veil where an individual directs a wrongful act to be done and uses a corporation as nothing more than an “alter ego.” This applies in the employment law context, as shown in the recent decision discussed below. 

It is important to consult an experienced employment lawyer to discuss the prospects of being able to pierce the corporate veil, as the law in this area is complex. There are other routes to consider as well, including oppression remedy claims under the Business Corporations Act. 

Plaintiff terminated after undergoing cancer treatment

In Griffon Integrated Security Technologies Inc. and Sheppard v Valley Associates Inc. and Martin, the plaintiff Mr. Sheppard, was originally employed by the corporate defendant for a two year-term. The written contract was between the plaintiff’s personal services company and the defendant’s company. After the two-year term, the plaintiff’s employment continued indefinitely, and he spent about another ten years as the defendant’s vice president and general manager.

In August 2018, the plaintiff was diagnosed with cancer. He continued working while undergoing treatment. In early 2019, the defendant terminated his employment without cause, giving no notice.

Plaintiff sued employer company and its owner, director and CEO

Shortly after, the plaintiff commenced a wrongful dismissal action against the defendant company, along with Mr. Martin, who was described as the company’s “owner, director, CEO and directing mind”.

Justice MacLeod was highly critical of the defence put together by the company and its owner:

“It was vigorously defended using what can only be described as a “scorched earth” strategy. The defendants accused the plaintiff of financial irregularities and argued after discovered cause. They launched a counterclaim for inter alia breach of contract, fraud and defamation. It is apparent from the discoveries and from the subsequent conduct of the defendants in the litigation that there was never any substance to the counterclaim and no basis to any defence. There are no documented performance issues, no warnings and no termination event.”

The defendants subsequently decided not to participate in the litigation. As a result, they were noted in default, which has the effect of the defendants admitting the allegations made by the plaintiff in his claim.

Court award damages for reasonable notice period

Justice MacLeod decided that the contract between the two companies was “in pith and substance” an employment contract. His Honour awarded damages equivalent to 20 months’ salary as reasonable notice after applying the ‘Bardal factors.’ 

The plaintiff also claimed punitive damages against the defendants. These are awarded in rare circumstances to punish the defendant where their conduct “shocks the conscience of the court” and needs to be denounced. 

The plaintiff argued that all of the damages should be awarded against Mr. Martin in his personal capacity. 

Court also awarded punitive damages and made the defendant company’s owner jointly and severally liable

In addition to approximately $290,000 for the notice period, plus interest and substantial indemnity costs, Justice MacLeod decided to grant the plaintiff an additional $75,000 as punitive damages to punish the conduct of the defendants. 

Justice MacLeod also agreed with the plaintiff that Mr. Martin was jointly and severally liable. His Honour noted that he was the sole shareholder, director and most senior official, he directed the conduct of the litigation, and he knew he was being sued personally and that his defence was to be struck out as a result of the default. 

His Honour decided that Mr. Martin directed a wrongful act to be done and used the company as an alter ego. As a result, the court was prepared to pierce the corporate veil and find the defendants jointly and severally liable for all the damages awarded. 

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination in a Corporate Context

Being terminated is a really stressful time. Paulette Haynes and her team at the Haynes Law Firm fight for the rights of employees that have not been paid appropriate termination packages or that have been mistreated in the termination process. We also advise employers on their obligations, helping them to transition employees in compliance with the law. Please contact us today via our online form or by phoning us at 416.593.2731.

We write often in our blog about issues relating to termination payments, such as the requirements under employment legislation and the common law and the impact of employment contracts. But there are other, more procedural, requirements that employers need to comply with when terminating an employee. The consequences of not complying with these requirements can be serious.

This article takes a look at some of the termination-related requirements imposed on employers by the Ontario Employment Standards Act (ESA) and the potential consequences of non-compliance. We also look at a recent decision of the Ontario Superior Court of Justice in which an employee asked the court for moral damages following the failure of his employer to meet ESA requirements.

The ESA termination-related employment standards

Under the ESA, employers need to comply with certain employment standards when terminating an employee. 

In most cases, when an employer terminates an employee who has been continuously employed for three months, they need to provide the employee with either written notice of termination or termination pay in lieu. Importantly, if notice is given, it must be given in writing. We have written more about calculating the statutory period of notice or termination pay here. 

During the notice period, the ESA requires that employers comply with certain requirements, including:

• not reducing the employee’s wage rate or altering any other term or condition of employment;
• not paying less than the employee’s regular wages for a regular work week; and 
• continuing to make benefit plan contributions. 

Payment, including statutory termination pay, needs to be paid within seven days after employment ends or on the employee’s next regular pay date, whichever falls later.

Employers also normally need to issue a record of employment (ROE) in the event of termination to both the employee and Service Canada. Deadlines apply under the federal Employment Insurance Regulations.

The potential consequences of failing to comply

Failure to meet employment standards on termination can lead to significant penalties for employers. 

Firstly, failure to comply with the ESA can be subject to enforcement by employment standards officers that can issue financial penalties. 

Secondly, courts do not look kindly on ESA non-compliance when assessing damages for wrongful dismissal. They can award additional amounts for moral and/or punitive damages if the employer breaches the duty of good faith at the time of termination, for example, by being “untruthful, misleading, or unduly insensitive.” Failure to comply with ESA requirements can justify awarding these additional damages to terminated employees. 

Plaintiff general manager terminated without cause 

In Teljeur v Aurora Hotel Group, the plaintiff was employed for about three years as the general manager of a resort and golf course in Haliburton, Ontario. 

In December 2021, two of the employer’s senior executives told him that he was being terminated because the resort was going to be managed by an outside company. The plaintiff recorded the meeting and submitted a transcript of the discussion as evidence. 

During the meeting, the plaintiff asked for confirmation of his termination in writing, but despite agreeing, the employer never did so. He worked the remainder of the week and was told that he would also receive eight weeks of “severance”.

Plaintiff only received ESA termination pay and there was a significant delay

Despite this assurance, the employer only paid the plaintiff his statutory termination pay under the ESA. In addition, the employer said that it mailed this to him as a cheque on January 14, 2022. The plaintiff never received this, and a new cheque was sent in June. 

The plaintiff had also spent almost $17,000 on behalf of his employer, and he was trying to get reimbursed. The employer had not paid him back and cited the plaintiff’s demand for interest on the amount owing as the reason it had not done so. 

The plaintiff sued his employer for common law damages for reasonable notice, reimbursement of the out-of-pocket expenses and moral damages for the employer’s bad faith. 

Court awarded damages for reasonable notice, reimbursement and moral damages

Justice McKelvey decided, based on an application of the Bardal factors, that the plaintiff was entitled to damages assessed at seven months’ salary as reasonable notice. His Honour also awarded reimbursement of the expenses. 

On the issue of moral damages, his Honour said:

“I have concluded that a claim for bad faith damages should be awarded in this case. As noted previously, the termination meeting was surreptitiously recorded by the plaintiff. This recording, however, highlights a number of disturbing aspects about the plaintiff’s termination.”

“Disturbing aspects” included failure to comply with the ESA

Justice McKelvey noted several disturbing aspects that warranted an award of moral damages, including the employers:

• failure to give written notice of termination;
• failure to pay the plaintiff’s ESA entitlement within seven days of the employment ending or on the next pay date;
• failure to repay the principal amount of the out-of-pocket expenses, which represented 23% of the plaintiff’s annual income;
• payment of the statutory termination entitlement after telling the plaintiff he would receive eight weeks’ pay; and
• attempt to encourage the plaintiff to resign.

His Honour decided that this conduct was untruthful, misleading or unduly insensitive and that the employer breached its duty of good faith and fair dealing in the manner of the plaintiff’s termination. His Honour awarded $15,000 for moral damages after finding that the manner of termination caused the plaintiff mental distress. 

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination

Navigating the termination process can be difficult. Paulette Haynes and her team at the Haynes Law Firm strategically advise employers on their obligations, reducing the chances of potentially expensive and time-consuming wrongful dismissal claims. We also help employees fight for their entitlements so that they have the means to re-establish themselves following termination. Please contact us to discuss your employment law matter through either our online form or by phoning us at 416.593.2731. 

Ontario’s Employment Standards Act (ESA) lays down the minimum period of notice (or compensation in lieu of such notice) that needs to be provided to most employees that have been terminated without cause (or terminated for cause in the absence of certain types of employee misconduct, such as wilful misconduct). 

Importantly, the ESA contains different rules that apply in the event of a mass termination. Recently, the Ontario Government announced that it intends to amend the law to respond to the rise in remote working. This article looks at the existing mass termination rules and the Government’s proposed changes. 

What constitutes a mass termination under the ESA?

Under the ESA, some differences apply between a regular termination and a situation of mass termination. The latter is defined in section 58 as taking place when an “employer terminates the employment of 50 or more employees at the employer’s establishment in the same four-week period”. 

The mass termination rules do not apply in some circumstances. For example, they do not apply if the number of employees terminated does not represent more than 10 per cent of the number of employees that have been employed for at least three months, and the permanent discontinuance of all or part of the business causes none of the terminations. 

What does the notification requirement involve?

If the mass termination rules apply, the employer must notify the Director of Employment Standards before giving the employees notice. The form is located here and asks for information, including the number of employees that are being terminated and the economic circumstances underpinning the mass termination. 

Once the Director has received this form, notice can be given to the affected employees. On the first day of the notice period, the form needs to be posted up in the relevant establishment in a place where the employees will notice it and remain there throughout the notice period. 

What is the statutory notice period for a mass termination?

Normally, the notice period required by the ESA depends on the employee’s length of service, ranging from one week (after three months of employment) to eight weeks (after eight years or more of employment). 

In a mass termination, the length of the notice period instead depends on the number of employees terminated. The notice period, or amount of compensation, if paid in lieu of notice, required under the ESA, is:

• eight weeks if 50 to 199 employees are to be terminated;
• 12 weeks if 200 to 499 employees are to be terminated; and
• 16 weeks if 500 or more employees are to be terminated.

What change is the Government proposing to the mass termination requirements?

On March 13, 2023, the Ontario Government announced that it would seek to pass changes to the ESA so that the existing mass termination rules will also apply to remote workers. The draft legislation has yet to be made available.

Currently, the mass termination rules apply if 50 or more employees are terminated in four weeks at an employer’s “establishment.” An establishment is defined in the ESA as a location where the employer carries on business. Separate locations are deemed to constitute one establishment if they are located within the same municipality or if one or more employees have seniority rights that extend to the other location under a written employment contract by which they may displace another employee of the same employer.

Under the proposed changes, the definition of “establishment” would be expanded to include the remote home offices of employees. The Government has said that this would make employees that work from home eligible to receive the longer notice periods available in a mass termination event.

What else is the Government proposing?

The Government also intends to change the information requirements that apply to new employees. The ESA requires employers to give employees a copy of the most recent version of the employment standards poster within 30 days of starting as an employee.

At this stage, the Government has simply said that the new proposal would require employers to give new employees certain written information, for example, on pay, location and hours, by a particular date.

What has the Government said about the proposed changes?

The Ontario Government has framed the proposed change to mass termination rules as necessary to respond to the changes in how employees conduct their work caused by the COVID-19 pandemic. Specifically, it notes that the pandemic led to a huge increase in the number of people working from home on both an exclusive and hybrid (workplace and home) basis.

The Minister of Labour, Immigration, Training and Skills Development, Monte McNaughton, said that these remote employees should be treated the same as more traditional employees:

“Whether you commute to work every day or not shouldn’t determine what you are owed. No billion-dollar company should be treating their remote employees as second-class.”

These proposed changes follow a raft of changes already made to Ontario’s employment legislation in 2021 and 2022 that seek to respond to changes in how people work. We have reported on many of these changes, such as the creation of rights for digital platform workers, the requirement for some employers to develop policies on the electronic monitoring of employees and on disconnecting from work, and the exclusion of certain business and information technology consultants from the ESA.

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination and Changes to Employment Legislation

The Haynes Law Firm helps both employers and employees deal with the termination process, including their obligations and rights arising from a mass termination event. Paulette Haynes, an experienced employment lawyer, is on top of the ever-changing employment law landscape and will guide your organization to minimize the risk of expensive litigation. Paulette also defends the rights of employees, helping them stand up and advocate for their entitlements. Please contact us online or call us at 416.593.2731.

In contrast to the more common situation of termination without cause, a termination for cause (also known as termination with just cause) occurs when an employer relies on an employee’s misconduct to dismiss an employee without paying termination entitlements, such as common law reasonable notice. 

The misconduct needs to be sufficiently serious to justify a termination for cause. Misconduct that might rise to this level includes where the employee destroys the employer’s property and displays insubordination by refusing to comply with instructions given by the employer. 

This article looks at the recent decision of the Ontario Superior Court of Justice in the case of Park v Costco Wholesale Canada Ltd., in which an employee challenged his termination for cause on these grounds.

Termination for cause may be justified if the employee engages in conduct incompatible with the employment relationship

As we wrote in more detail in a previous article, an employer may be entitled to dismiss an employee for cause if they have engaged in conduct incompatible with the employment relationship’s fundamental terms. 

The misconduct must be sufficiently serious to cause a breakdown in the employment relationship. This is a fairly high bar for an employer to demonstrate. This makes sense because an employee terminated for cause loses the right to receive reasonable notice of the termination or compensation in lieu of that notice. However, the minimum statutory notice period is required unless the employee is guilty of wilful misconduct, disobedience or neglect of duty. 

An employee terminated for cause can argue their conduct did not justify termination

An employee dismissed for cause can sue for wrongful dismissal, arguing that their conduct did not justify termination for cause. The onus is on the employer to prove that it did.

While the core question is whether the employee engaged in misconduct that is incompatible with the fundamental terms of the employment relationship, courts apply a three-stage analysis to determine whether the conduct justifies termination:

1. The nature and extent of the employee’s misconduct. 
2. The surrounding circumstances of the employment relationship, including the employee’s employment history, role and responsibilities, and the employer’s business, policies and practices.
3. Considering the above, the court decides whether the dismissal was a proportional response by considering whether the misconduct was serious enough to cause a breakdown of the employment relationship. 

Plaintiff was transferred between departments

The plaintiff employee worked for Costco for 20 years, beginning his career with the company in 1995. He worked his way up the organization, eventually reaching the position of assistant buyer with the Canadian head office in Ottawa.

The plaintiff worked in the seasonal and toys department. He spent part of his work time building a Google-cloud-based website for the department that allowed users to share files. His manager told him that this was useful.

After the conflict with his manager that caused stress and medical leave, the plaintiff was transferred to the lawn and garden department. 

Plaintiff was terminated for cause after deleting a website

The plaintiff’s now-former manager sent him an email asking for access to the site and for its ownership to be transferred. After reading the email, the plaintiff deleted the website, replying that no one had told him that they wanted to use it. 

After the general merchandise manager responded, telling him not to delete something from the system without buyer permission, the plaintiff sent an angry email which included:

“I was using the site for my use, no one was interested …. exactly how many times should I be asking for an update, can I not trust in my managers to be able to get back to me in a timely manner and not ignore my requests?

They need to take some ownership and responsibility.”

Costco was then able to restore the website, at which point the plaintiff deleted it again, including from the computer’s recycling bin. After an internal IT investigation confirmed the deletions, the employer terminated his employment for cause.

Plaintiff committed several acts of misconduct

The parties did not dispute that the website was the employer’s property. In addition, the plaintiff’s contract allowed the employer to terminate for wilful destruction of company property and any act of insubordination.

Justice Ryan Bell decided that the plaintiff committed numerous acts of misconduct, namely:

• deliberately deleting the website after receiving an email from his former manager, which amounted to the destruction of the employer’s property;
• sending a misleading email to the manager, which wrongly suggested that he deleted the site in the past because no one wanted it;
• sending an email to the general merchandise manager which was insubordinate and disrespectful; and 
• permanently deleting the website a second time in defiance of instructions. 

Wilful misconduct justified termination for cause

Her Honour noted the surrounding circumstances, including the plaintiff’s employment in a managerial position and frustration with how he had been treated.

Justice Ryan Bell decided that the employer had sufficient justification for terminating the plaintiff’s employment because the misconduct could not be reconciled with his employment obligations:

“His actions were not mere errors in judgment; they were intentional, discrete acts involving the destruction or attempted destruction of company property, insubordination, and sending a misleading email. These actions were committed in the face of his obligation to act with integrity and honesty in the discharge of his duties as an assistant buyer. The Employee Agreement provided that wilful destruction of property and insubordination could result in termination of employment.”

Her Honour determined that the plaintiff’s conduct met the higher requirements for amounting to wilful misconduct because it was intentional and deliberate. The court dismissed the plaintiff’s claim.

Contact Haynes Law Firm in Toronto for Guidance on Termination for Cause

The Haynes Law Firm helps both employers and employees manage situations relating to termination for cause. Receiving advice from an experienced employment lawyer is an important stage in managing the risks presented by an employee’s misconduct or an employer’s attempt to remove an employee from the organization without paying termination entitlements. Please contact us online or call us at 416.593.2731.

Termination without cause is often accompanied by a termination package. This sets out the terms that apply to the termination, such as the amount of notice that the employer will provide. 

The termination package is very important for both employers and employees alike. For employers, it is an opportunity to move an employee out of the organization in a way that attempts to prevent the employee from bringing claims down the track. Employees need to ensure that the package being offered includes all of their entitlements under the terms of their employment agreement. It is important to avoid signing anything before you have had a chance to assess your options.  

An experienced employment lawyer is an important resource for employers and employees going through the termination process. They can help employers to put together a termination package that decreases the likelihood of costly and time-consuming litigation. Having a lawyer review a termination package proposed by your employer increases the chance of maximizing an employee’s compensation so they have the resources needed to search for a new job. 

This article sets out a few of the basics around termination packages. Much depends on the employee’s contract of employment. 

Notice of termination or payment in lieu normally applies

The termination package needs to comply with the relevant provincial or federal legislative employment standards. Most employees are entitled under the Ontario Employment Standards Act (ESA) to a statutory minimum amount of notice, or payment in lieu of such notice, which is based on the length of service. 

Employees may also be entitled to a lengthier period of common law notice, so employers sometimes include pay instead of notice beyond the statutory minimum in the termination package. Courts determine the length of this notice in wrongful dismissal claims by looking at a range of factors, including the employee’s age, length of service, the character of employment and re-employment prospects.

Employment contracts sometimes attempt to remove the right of employees to claim common law notice. As we have written about in other articles, such provisions may not be enforceable. An employment lawyer can advise you on whether or not your contract effectively removes this entitlement.

Severance pay might also be required

Although “severance” is often used loosely to refer to any payment made when an employee is terminated, it is a specific concept under the ESA. The terms of the relevant employment contract may also contain an entitlement to severance. 

Under the ESA, the right to severance is limited to a subset of longer-serving employees. In order to be entitled to severance, an employee needs to have had their employment severed, which is defined in section 63 to include those who have been dismissed, plus:

• the employee needs to have been employed by the employer for at least five years; and 
• the severance must have occurred due to a permanent discontinuance of all or part of the business at an establishment in which at least 50 employees have been severed within six months, or the employer has a payroll of $2.5 million or more.

Severance payments can be substantial. If entitled to severance under the ESA, the employee receives one week’s pay multiplied by their number of years of employment (and the number of months divided by 12), up to a maximum of 26 weeks.

Bonuses, commissions and benefits during the notice period

Employees are normally entitled to non-salaried compensation, like bonuses and commissions, during the reasonable notice period. Receiving advice from an experienced employment law is very important in relation to rights to non-salaried compensation. Employment contracts or termination packages may attempt to remove these rights. 

Likewise, benefits (such as medical, disability insurance, pension and RRSP contributions) should generally continue during the notice period. Employees can request compensation if benefits are cut off early.

The employer may request a release of claims

Sometimes employers require employees to sign a release of all claims in exchange for accepting the termination package. There may be pressure to execute the documents quickly.

Such a release may not only prevent the employee from bringing a wrongful dismissal claim but may also seek to remove the ability of the employee to start other types of proceedings, such as those seeking a remedy for discrimination or harassment. As we wrote in a previous article, signing a release may not prevent a claim, depending on the particular circumstances. Employers and employees should take legal advice before seeking or signing a release. 

If the employee rejects the termination package, a wrongful dismissal claim may be coming

Employers may attempt to sweeten the termination package to ward off claims by employees. As we mentioned above, the employer might offer compensation above the minimum ESA notice requirement, particularly if the employee is entitled to common law notice. The employer may offer other things as well, such as retraining or career guidance services and letters of recommendation, which may help the employee to transition into a new position with another employer. 

Suppose the employee turns down the proposed termination package and either serves out the statutory notice period or receives this payment in lieu. In that case, this may indicate that they are considering bringing a claim for wrongful dismissal. This is particularly the case if they are entitled to common law notice.

Contact Haynes Law Firm in Toronto for Guidance on Termination Packages

As this article has shown, it is important to get advice from an experienced employment lawyer before offering or accepting a termination package. Termination can be a risky time for both employers and employees alike. The former need to manage the risk of litigation, and the latter need to ensure that they receive what they are owed. Paulette Haynes of the Haynes Law Firm has many years of employment law experience and can help you get the job done. Please contact us by filling out the online form or calling 416.593.2731 to arrange a consultation to discuss termination or a termination package.

When an employee resigns, they leave their employment often to take up a new position or enter retirement. When an employee does so, they lose their ability to claim certain entitlements, such as a reasonable notice period.

This article looks at how to determine whether an employee has resigned, along with a recent decision of the Ontario Superior Court of Justice, where an employee walked off the job after a disagreement with her manager. 

Resignation versus termination

Both employer and employee are generally entitled to terminate an employment contract of indeterminate length. When the employee does this, it constitutes resignation. On the other hand, when the employer ends the relationship, it is called termination.

The characterization matters. If an employee is terminated by their employer, they are entitled to the payment of reasonable notice under the Ontario Employment Standards Act and potentially the common law. The employee can bring an action for wrongful dismissal to enforce this right.

However, an employee does not have this entitlement in the event of voluntary resignation. 

Resignation needs to be clear and unequivocal

Because of this important difference, resignation by an employee must be unequivocal, objectively reflecting an intention to resign. When viewing the matter objectively, resignation does not need to be made in writing, but a reasonable person needs to understand that the employee resigned. 

Notably, an employee might be found to have resigned if they have repudiated their employment contract, which means they refuse to perform an essential part of their duties. The employer can accept this repudiation, ending the employment relationship.

Plaintiff claimed wrongful dismissal; employer argued she had resigned

In Scull v Ensemble Travel Ltd., the plaintiff employee brought an action for wrongful dismissal following an alleged termination. The defendant’s employer claimed that she had resigned instead. 

The defendant is an organization of travel agencies which offers its members services and tours. The plaintiff started working for the company in the Toronto office in 2009. She was a marketing and production manager in charge of a destination wedding program.

Plaintiff testified that she was terminated after a dispute with her manager

The plaintiff had asked for the responsibility of the destination wedding program to be assumed by others, noting that she was occupied with other duties. 

A call was set up with senior management. The plaintiff brought up the wedding program issues, and after an awkward silence and no response, she was upset, experienced an anxiety attack, and asked her manager to book her off sick for the remainder of the day. She accused her manager of having “thrown her under the bus” and claimed that she said actions like this “made her want to resign.”  

She returned to the office the next day and met with the defendant’s vice president of human resources. The latter said that the manager had told her that the plaintiff had resigned, and the plaintiff denied this. The plaintiff later sent an email apologizing for her remark about wanting to resign.

The plaintiff missed two days of work after suffering vertigo. She returned to the office and told the vice president she would consider staying if she did not need to report to her manager. She claimed the vice president texted her to say it was her last day.

Employer claimed that the plaintiff resigned after the incident and subsequently confirmed the resignation

The manager testified that the plaintiff said she was resigning after the call. The vice president also said that she confirmed this at their meeting. She wanted to avoid the increasing emphasis on working in a team setting. The vice president encouraged the plaintiff to consider her resignation for a couple of days. 

The vice president confirmed that the plaintiff demanded that her manager be substituted for another leader. The vice president said this was not feasible, so her resignation stood. After the plaintiff hung up on the conversation, the vice president confirmed the employer’s acceptance of her resignation and notified her that her benefits would be discontinued. 

Court preferred the evidence of the employer’s witnesses

Justice Brown had to determine whose version of events to believe. Her Honour found the plaintiff’s evidence “problematic,” observing that she was defensive and gave inconsistent answers.

After the incident, the court decided that the plaintiff told the vice president that she was resigning after having considered doing so for a long time. The statements and conduct expressed an intention to resign.

The plaintiff resigned and was not terminated

Justice Brown explained that:

“The jurisprudence has long established that the giving of an ultimatum by an employee, by which the employee refuses to perform work unless certain conditions are met, is incompatible with their continued employment, and constitutes a resignation.”

Her Honour agreed with the employer that the plaintiff gave two options – rescinding her resignation if she was given a change in reporting structure or she would leave. As a result, it could also be found that the plaintiff resigned due to this ultimatum.

The court decided that the plaintiff expressed a clear intention to resign and that a reasonable person viewing the matter objectively would reach the same conclusion. The employer accepted the resignation, paying her the outstanding wages and accrued vacation time. As a result, the court dismissed the plaintiff’s claim. 

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination and Resignation

The Haynes Law Firm helps employers and employees with all their employment law needs. The firm helps employers manage the risk of litigation by appropriately dealing with employee resignation threats. The Haynes Law Firm also assists employees that have been forced to ‘resign’ to obtain all of the legal entitlements to which they are owed. Please contact us by filling out our online form or calling us at 416.593.2731 to arrange a confidential consultation to discuss your employment law issue.

Employees terminated without cause are entitled to a reasonable notice period or payment in lieu of this period. While the legislation sets out the minimum period of notice, employees may be entitled to a longer period of notice under the common law depending on the circumstances, so employers may provide a more generous termination package, or employees may claim common law notice in an action for wrongful dismissal.

The COVID-19 pandemic resulted in a severe downturn in many industries, with employees laid off or terminated. Some employees entitled to common law notice received significant damages awards in recognition of the economic uncertainty and difficulty in finding a new position. 

This article looks at some of the principles relevant to the award of common law notice periods, along with a recent decision of the Ontario Superior Court of Justice in which an Air Canada employee terminated as a result of the COVID-19 pandemic received a 24-month notice period.

Statutory versus common law reasonable notice

Legislation, namely the Ontario Employment Standards Act (ESA) and Canada Labour Code (Code) that applies to employees in federally-regulated workplaces requires the payment of a minimum period of notice to employees that have completed three months’ service. The amount of notice required under provincial legislation depends on the employee’s length of service.

However, the common law may provide a more generous notice period to employees terminated without cause. If an employee succeeds in a wrongful dismissal claim, the court may award this notice. As a result, some employers offer termination packages that go beyond the legislated minimum to avoid such claims. 

It is important to understand that employment contracts may seek to remove the entitlement to common law notice. Whether this is enforceable is another matter and may depend on issues, including the specific language used in the termination clause.

How are common law notice periods calculated?

As we have mentioned in a previous article, courts normally apply the Bardal factors in order to decide upon the period of common law notice. These factors are:

• the character of the employee’s employment;
• their length of service;
• their age; and 
• the availability of similar employment, having regard to the employee’s experience, training and qualifications.

The Court of Appeal for Ontario has also stated that exceptional circumstances are generally required to justify a notice period that exceeds 24 months.

What impact has the COVID-19 pandemic had on common law notice periods?

Some courts have provided lengthy notice periods to employees terminated due to the COVID-19 pandemic. This aligns with the purpose of providing reasonable notice to give the employee time to find alternate employment. The economic conditions created by the pandemic, resulting from measures including shutdowns, made it difficult for some employees to do this.

The Court of Appeal for Ontario has also said that the employment factor’s character is potentially less important these days. As a result, relatively old employees who have spent their entire career with a company and have struggled to find work after being terminated may be entitled to a long notice period, even if their role is not a managerial position.

Airline employee terminated without cause in May 2020

In Williams v Air Canada, the plaintiff employee started working for Canadian Airlines International in 1996. The plaintiff started working for Air Canada after it acquired the airline in 2000. She worked her way up to the position of International Operations Training Manager prior to her termination without cause in May 2020 at age 52. Air Canada slashed its workforce by more than half in 2020 as a result of the COVID-19 pandemic.

The plaintiff earned an annual salary of about $70,000 plus various benefits. She designed and delivered training programs for staff, although did not directly manage other employees.

The plaintiff did not accept the severance package she was offered so the defendant paid the minimum statutory entitlements under the Code. She sued for wrongful dismissal and was unable to secure new employment until spring 2022.

H2: Defendant argued for 12-month notice period

Air Canada sought a 12-month notice period, arguing that the plaintiff’s position was not particularly senior as it was within the lower half of its position hierarchy, and she did not manage employees. 

The plaintiff argued that the reasonable notice period was 24 months.

Court agreed with plaintiff; awarded 24-month notice period

Justice Ryan Bell observed that:

• older, long-term employees are normally entitled to a longer notice period as they may be at a competitive disadvantage in finding alternate employment; and
• serving one employer may reduce employability because potential new employers may see them as not adaptable.

Her Honour said:

“It seems to me that Air Canada unduly emphasizes the character of [the plaintiff’s] employment, and thereby diminishes the importance of her age and length of tenure, to minimize the reasonable notice to which she is entitled.”

Finally, her Honour noted the plaintiff was terminated due to the COVID-19 pandemic and decided she was entitled to notice at the higher end of the range because of its impact on the airline industry.

The court awarded a notice period of 24 months, or approximately $130,000.

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination

The Haynes Law Firm helps employers and employees with all their employment law needs. Paulette Haynes can assist employers in avoiding the courtroom in the first place by correctly drafting employment contracts to limit employees’ entitlement to common law notice. We will help you to proactively manage your employment law issues to mitigate risk.We also work with employees to protect their legal rights and ensure they receive all of their entitlements in the event of termination. Let us get you what you need so that you can get back on your feet. Please contact the Haynes Law Firmonline or call us at 416.593.2731.

Fixed-term employment contracts are used to hire an employee for a specified period of time. This is in contrast to the normal situation of employing an individual for an indefinite period. Employers may prefer a fixed-term employment contract for certain situations, such as if they only need assistance for a particular project expected to last a certain duration or if they need cover for another employee who is on leave. 

Ending a fixed-term contract has different implications than terminating a regular employment contract. Depending on the circumstances, an employee that ceases working under a fixed-term contract may be entitled to less or more than they would have been if they were a regular, indefinite employee. 

This article takes a look at why this is the case by examining some of the general principles that apply to fixed-term employment contracts and a recent decision of the Ontario Superior Court of Justice in which an employer sought to defend an action for wrongful dismissal by arguing that the employee was on a fixed-term contract.

Do you have a fixed-term employment contract? 

First things first, is there even a fixed-term contract in place? A fixed-term contract specifies the date the employee’s employment will end. Although this might be obvious from the terms of the contract, sometimes it isn’t clear, and the parties to an eventual dispute disagree. 

Suppose there is doubt about whether the employment contract is fixed. In that case, the court looks for unequivocal and explicit language suggesting a fixed-term arrangement to ensure that relationships of continuous service are correctly characterized as fixed-term employment. It is a question of fact based on the words used in the contract and the reasonableness of the parties’ assumptions from those words.

Is a fixed-term employee entitled to reasonable notice of termination?

Some rights given to employees under the Employment Standards Act are not available to those working under fixed-term contracts. An example is the entitlement to reasonable notice of termination. 

Subject to the particular terms of the agreement, fixed-term contract employees that finish working for the employer at the end of the term do not need to be given notice because employment simply ends when the contract term expires.

A terminated fixed-term employee could be entitled to be paid the balance of the term

In some circumstances, a fixed-term employee will be entitled to reasonable notice or termination pay. 

An example is if an employee on a fixed-term contract is terminated before the end of the term. The outcome will depend on the terms of the contract. It may contain a termination clause that allows the employer to terminate the contract before the end of the term after providing a specified period of notice. 

However, if the fixed-term contract does not contain such a termination clause, the employee may be entitled to a contract buyout, meaning the wages they would have earned had they been permitted to serve the remainder of the term. We recently reported on a case where the employee was paid $54,000 in damages for wages for the balance of a one-year contract. 

Temporary employee’s term was extended four times

In Steele v The Corporation of the City of Barrie, an employee who worked for the City of Barrie brought a wrongful dismissal claim after his employment was terminated without cause and reasonable notice.

The plaintiff’s initial employment contract stated that “the expected duration of [the] temporary employment [was] expected to be … approximately two years” from June 5, 2014, to June 3, 2016. The employee subsequently received four extensions, each confirming that the temporary position had been extended to a specified date.

The final extension notice said that the period of employment was extended to December 31, 2017. He was no longer employed from this date, with his contract not extended again.

Employee argued that he was a permanent employee

The plaintiff claimed he was a permanent employee entitled to reasonable notice of termination. He argued that the term specified in the agreement needed to be clarified. 

In the alternative, he claimed that he had become a permanent employee as the employer’s conduct led him to understand that he was indefinitely employed. The plaintiff relied on some cases in which continuous service for many years, together with representations and conduct, established an indefinite-term employment relationship. 

Court decided employee was on a fixed-term contract; dismissed the claim

Justice McCarthy decided that the initial contract was clear as to the term. Despite speaking of an “expected duration” of “approximately two years,” which left open the possibility of extensions, it precisely set out the dates of the initial employment period. The extension notices were also unambiguous, describing the arrangement as “temporary” and specifying end dates.

His Honour also found that the plaintiff could not reasonably have formed the impression that his employment term was indefinite. There was no evidence to support this, and various matters tended to show that the arrangement was for a fixed term, such as the extensions granted before the end of the terms. 

As a result, the court concluded that the plaintiff was employed under a fixed-term contract, which was subject to valid fixed-term extensions until the last one expired in December 2017. There was no wrongful dismissal or need for the employer to provide reasonable notice.

Contact Haynes Law Firm in Toronto for Guidance on Fixed-Term Employment Relationships

The Haynes Law Firm advises employers on their obligations to fixed-term employees. The founder of the firm, Paulette Haynes, drafts contractual arrangements that reflect the current situation and provide the flexibility needed, including in relation to the termination. Haynes Law Firm also works with employees to protect and advocate for their legal rights and ensure they receive all of their entitlements in the event of termination. Employees may be entitled to more than their employers say, so it is best to get advice from an experienced employment lawyer. Please contact the firm online or call us at 416.593.2731.