Employee Rights: Top 5 Facts Your Employer Doesn't Want You to Know

Top 5 Issues Employees Should Know

Canadian employment law is vast and complicated enough to most employment lawyers, let alone the average employee without legal education and expertise. With various statutes creating the minimums (or “base floor”) of employee rights, as well as employment contracts and rapidly changing caselaw (or “judicial decisions”) that often expand on employee rights in Ontario, both employees (and employers) are well advised to always speak with an employment lawyer regarding any work-related issue or dispute to get tailored legal advice and representation.

Given that employment law can be difficult to understand for the average person, the following represents some general information on some observations we employment lawyers tend to see:

1. Employment Contracts

Employment contracts set the rules, terms and conditions of employment. Regardless of whether they sign an actual document called an “employment contract” or “employment agreement,” all employees are part of an employment contract with their employer as part of their job. Why? Because a contract can exist either in verbal or written form. In other words, there is no need for employers and employees to actually sign a written employment contract – one will exist under “common law” to govern the employment relationship. However, there are different standards of law that will apply if common law applies as opposed to an employment contract.

The main reason employers insist on having employees sign written employment contracts is to establish the terms of the employment relationship and minimize dispute. Most importantly, it allows an employer to limit the amount of severance pay they have to provide the employee upon termination of their employment (e.g., to the minimum termination pay and severance pay under the Ontario Employment Standards Act, 2000 (the “ESA“)). Further, as we have seen with the COVID-19 pandemic, it also provides an employer with flexibility to arrange for any potential temporary layoff by expressly including that right in the employment contract.

In either of the above examples, if an employer does not properly address these issues in the employment contract, the employee’s rights are governed by common law, which is often more favourable to an employee since it restricts an employer’s rights in the relationship. For example, under common law, employees are entitled to reasonable notice of termination that is greater than the minimum standards under the ESA. Similarly, under common law, employers do not have an automatic right to impose a temporary layoff unless it’s provided for in the employment contract (otherwise, the employee may have a claim for constructive dismissal and a fair severance package against the employer).

Also, a common misconception by employers is they can simply ask an existing employee to sign a new employment contract. In fact, that is not the case. As discussed above, even if the employee has not previously signed an employment contract, the employee is still protected by common law under a verbal employment contract. This means the employer must provide “fresh consideration” (something of new value) to the employee in order to make the new employment contract legally binding (e.g., a signing bonus, salary increase, etc.).

Where an employer promotes an employee, or moves them from part-time to full-time or from contract to permanent status, the change in employment status can be “fresh consideration” for an employment contract with enforceable termination provisions. Employers must be careful to present the employment agreement as a condition of the promotion or change in status, must provide the contract to the employee before the change takes place, and the employee must be given enough time to seek independent legal advice if they so choose. Other changes such as the introduction of a group benefit plan, pension plan or non-discretionary bonus plan can also provide the necessary consideration for a new employment agreement.

This is a delicate task, which is why prudent employers get legal advice from an employment lawyer to help them determine whether their employment contracts are enforceable, or to help implement contracts with enforceable termination clauses that meets the rigorous requirements set by the employment law.

In the era following COVID-19 when workplaces return to work, it will be important for employers to consider refreshing their employment contracts, and ensure they maintain future workplace flexibility while also complying with employment law standards.

2. Termination and Severance Pay

When they decide to terminate an employee’s job, employers have an obligation to provide the employee with either sufficient prior notice of termination, or a severance package with fair and appropriate severance pay. The main issue is: How much?

Under Ontario employment law, the answer depends on some of the following questions:

Does the employer have just cause to termination employment without notice of termination, or severance compensation?
Did the employee sign an employment contract the grounds for termination, including just cause?
Is the termination without cause? If so, did the employee sign an employment contract with a termination clause that specifies how much prior notice of termination, or severance compensation, the employee will receive?
Is the termination clause (and the employment contract) valid and enforceable?
If applicable, what is the employee’s “common law” entitlement to a severance package, including their age, position, years of service and the labour market condition.

Whether you are an employee or an employer in a termination of employment, it is prudent to speak with our employee rights lawyer to determine your legal rights and options.

3. Constructive Dismissal

A constructive dismissal occurs when an employer unilaterally alters a fundamental aspect of an employee’s job without the employee’s permission. This can include, among other things:

a demotion
significant pay cut
relocation to a distant place of work
or a poisoned/intolerable work environment
unauthorized temporary layoff

The key elements in constructive dismissals is that the change to the employee’s terms and conditions of employment are significant (since minor changes are generally permissible) and the employee does not consent. Both of these determinations will always depend on the specific facts of each case. Put somewhat differently, to determine a constructive dismissal, the court will review the circumstances which the employee argues constitute a constructive dismissal, and apply an objective test to determine whether a “reasonable person” in the same situation would also conclude that an essential term of the employment contract was substantially changed.

It is important to note that a constructive dismissal claim is risky and must be carefully considered before taking any steps that could impact an employee’s legal rights. Unlike situations where an employer formally terminates an employee’s job and must then justify the decision with the legally required notice of termination or severance compensation, the burden of proving a constructive dismissal rests on the employee. This comes with significant financial risks when an employee claims a constructive dismissal.

If an employee claims but is unable to prove they were, in fact, constructively dismissed, the court will conclude they voluntarily resigned from their employment. In that case, the employee is not entitled to any severance package. This risk with constructive dismissals is why employees who believe that they have been constructively dismissed by their employer consult with a employment lawyer before making any decision to resign. With the help of an experienced employment lawyer in reviewing the facts at issue, the employee will be in a better position to determine whether they have a basis for claiming constructive dismissal, as well as other strategies in responding to the employer’s unilateral change to their job.

If you want legal advice that is specific for your own case, book a consultation today.

4. Reasons for Termination of Employment

We often meet with employees who express understandable frustration with the fact that their employer did not provide any reason for terminating their employment, especially given their otherwise strong performance in their job. However, it is in fact the case that, in most cases, an employer is not required to provide an employee with a reason why his or her employment is terminated. But there are important exceptions, such as:

if an employer terminates the employee’s job for “just cause”, the employer must generally provide an explanation (employers generally have a hard time proving just cause for termination).
while an employer may terminate employment without cause for any reason (or no reason at all), it cannot do so if any part of the reason for the termination of employment is based on:
- discrimination (e.g., the employee’s age, gender, disability, pregnancy, ethnicity or race)
- complaining about workplace harassment and bullying
- the employee asking questions about the ESA or exercising their rights under the ESA (e.g., taking a vacation or sick leave of absence, or refusing to work excess hours without overtime pay).

5. Temporary Layoffs

A temporary layoff is said to occur when an employer cuts back or stops an employee’s work without actually ending their employment (e.g., business slowdown).

As discussed above, the right for an employer to temporarily layoff an employee must be negotiated for as part of the employment contract (in writing). Generally, an employer cannot simply rely on the ESA to force a temporary layoff, since the ESA regulates (does not necessarily create) the length and terms of a temporary layoff. Otherwise, a temporary layoff may result in a constructive dismissal claim if it is not allowed by the employment contract.

Contact

If you would like to discuss your own situation and obtain legal advice, please contact (647) 822-5492, or submit the contact form on the right.

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