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Latest Chapter In Employment Law: Potentially Dramatic Changes To Employment Legislation And Another Court Of Appeal Decision On Termination Clauses

In this edition of The Latest Chapter, we discuss the Changing Workplaces Review, which could trigger the most significant reforms to Ontario’s employment and labour law statutes in decades. We also note the Ontario Court of Appeal’s latest decision in Wood v Deeley, which could significantly impact how employment agreements and termination provisions are drafted and enforced in Ontario.

The Changing Workplaces Review: Significant Reforms To Employment Law May Be Coming Soon

You may have seen in the news that the Ontario government is conducting a review of the changing nature of the workplace. The stated objective is ‘to improve security and opportunity for those made vulnerable by the structural economic pressures and changes being experienced by Ontarians’ while supporting business in today’s economy.

Last summer, the Special Advisors of the Review released an Interim Report, proposing various options to amend Ontario’s employment and labour law statutes. The Report could trigger the most significant reforms to the Employment Standards Act, 2000 (the “ESA”) and the Labour Relations Act, 1995 since the 1990s, as it recognizes the new realities of the changing economy, including the spread of part-time and contract work.

The Review’s Special Advisors are now preparing a Final Report and recommendations, which is expected this Spring.

The Employment Standards Act – Options for Reform

In the Interim Report, the Special Advisors thoroughly review the ESA and consider hundreds of options for reforms. Each option should be considered carefully, including the option of maintaining the status quo, which is consistently one of the options on the table.

Some of the notable options for reform detailed in the extensive Report include the following:

  • Scope and Coverage of the ESA: Shifting the onus to the employer to prove that an individual is not an “employee” if there is a dispute about employment status; and including a dependent contractor provision in the ESA.
  • Standards: Making paid sick days mandatory; lowering the overtime threshold from 44 to 40 hours per week; and requiring employers to provide schedules in advance.
  • Part-Time, Temporary, and Casual Employees: Requiring that such employees receive equal pay and/or benefits as full-time employees in the same establishment unless differences in objective factors justify the difference.
  • Termination Pay: Reconsideration of the eight week maximum for notice of dismissal / Termination Pay.
  • Exemptions and Exclusions: Under the ESA, some of the rules (e.g. overtime pay), do not apply to certain types of jobs or employees such as managers/supervisors, residential care workers and IT professionals. The Special Advisors are reconsidering these exemptions, and considering whether to include interns and trainees under the protection of the ESA by eliminating the “trainee” exclusion.
  • Enforcement and Compliance Mechanisms: Eliminating the requirement that individuals approach their employers regarding ESA violations before filing a complaint; increasing penalties for violations; and allowing anonymous claims.

 

Wood V Deeley: Court Of Appeal Strikes Down Termination Clause

As we have recently written, the ongoing saga of judicial interpretation of termination clauses continues with the Ontario Court of Appeal’s latest decision in Wood v Deeley, in which the Court overturned the lower court decision and struck out the termination clause in question. The Court found the termination clause unenforceable for breaching the ESA, because it excluded any obligation to pay Severance Pay or continue the employee’s benefits during the notice period. The combination of a clause confirming that the employee’s only entitlements at the time of dismissal would be those set out in the agreement and the lack of a saving clause “fixing” the clause if it breached statutory requirements resulted in the failure of the clause. The Court confirmed, yet again, the importance of drafting clear termination clauses.

This decision confirms that a breach or potential breach of the ESA will render a termination clause invalid. As we have written about before, employers are well-advised to use a “saving provision” explicitly stating that if the clause currently or in the future falls below the requirements of the applicable legislation, it should be interpreted so as to comply with those obligations.

Employers are welcome to contact us for advice when drafting employment contracts as well as when terminating employees. Similarly, employees faced with a job offer or a severance package should contact us to understand their rights and the enforceability of the contractual provisions.

By Nadia Zaman


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