When I retire, can I keep health care benefits?

| October 18th, 2017 | No Comments »

Question:  I have been employed by the same company for 22yrs and am 63 yrs old. Health care benefits are provided by the company and reduced benefits were available if you are over 60 when you retire. It was announced recently that no benefits will be provided for people that retire after Dec 31/17. I was planning to work for a few more years. I do not have a formal contact.  Is this legal?

Answer: This is most likely illegal. Retiree health care benefits, if offered by an employer, are extremely important to retirees and their families. They could be considered a fundamental part of your compensation package and a form of deferred compensation for contributions that you have made to the company over the course of your career (i.e. like a long-term incentive plan). Since the retiree benefits were available to you until now, when you are on the cusp of retirement, you reasonably expected that these benefits would be available on retirement and arguably planned your affairs taking these benefits into account.

As such, unless you signed an employment contract or the employer had a written policy that you knew about, which specifically and clearly provided that the company had a right to amend or cancel the retiree benefits at any time, the company cannot simply take away this benefit, without providing proper notice to you.
In this case, you did not have a written employment contract (and I assume there is no policy), so the employer could not have reserved the right to eliminate the retiree benefit plan at any time. This means that the only way the employer could take away the retiree benefits from you while you are still working is by giving you “reasonable notice” of the change. Here, the employer proposes to put the changes into effect within mere months – this is not proper notice. The employer should have given you 18-24 months of notice if it wanted to make a significant change to your contract. You, therefore, have grounds to challenge the elimination of the benefits in December 2017 and a potential claim for constructive dismissal.

Would I get paid my commission if I left the company?

| October 11th, 2017 | 1 Comment »

Question:  If I leave this company in around a month, would I still get paid my commissions from the deal I just won over the next 3 years? I’ve been working for a company for around 3 years, I have been made a better offer at another company and thinking about quitting my job and joining this new company.  I have around $400,000.00 in commissions from a large job I just landed that will be paid out upon monies received over the next 3 years from now.

Answer: This is an excellent question.  Many employees wonder – what happens if I leave my job right before I am supposed to get my bonus?  Is there any way to get the bonus?  The answer is maybe.  It will depend on the specific facts of your case, and whether there are any written documents that address your commissions or bonus payments (e.g. an employment contract, an Annual Incentive Plan, etc.)  Other important considerations will include:

  • Whether you are leaving the company of your own accord (as opposed to having your employment terminated),
  • How your commissions or bonus payments are earned or calculated (have you already earned the bonus?  does the company use a specific formula, or is the whole payment subject to discretion?), and
  • Are there any documents which address what happens to your bonus or commissions if your employment ends?

One of our lawyers can review your situation and let you know if, and how, you can claim your commission payments even AFTER you have left the company.  You do not necessarily have to forfeit your bonus or commissions just because you get a new job before it is paid.

Refusing Unsafe Work In Ontario

| October 5th, 2017 | No Comments »

Workers in Ontario covered under the Occupational Health and Safety Act have a right to refuse, reasonably believed unsafe work that is not essential to the job. For instance, if working at high heights is essential to complete the tasks of the job, this cannot be reused if there is adequate safety equipment and regulations in place.

Under the Occupational Health and Safety Act, workers have a right to refuse unsafe work on the basis of:
1. equipment, machinery or devices that the worker is required to operate that is likely to endanger the worker or other around
2. the physical condition of the workplace itself posing a danger to the worker of any others around, which includes the likelihood that workplace violence will occur
3. any equipment, machine or device is not up to code under the Occupational Health and Safety Act

If a worker has a reason to believe that work required is unsafe due to any of the above, the worker must report this to their employer or supervisor, and that supervisor/manager must start an investigation immediately. The investigation must be done in the presence of a health and safety committee member that represents employees, if applicable, or the workplace health and safety representative. Further, during the investigation, the worker must be in a safe place as close as possible to the workstation, and available to the employer or supervisor for investigatory purposes. The worker also must receive regular pay during the investigation.

Upon the conclusion, if the investigation, the worker must be given the results, and any remedies implemented, if applicable. If the worker then still has a reason to believe the work is unsafe the employer, the worker, or a person on the behalf of the employer or worker must contact an inspector from the Ministry of Labour. The worker must remain at work during normal working hours in a safe place, and available to the inspector for investigatory purposes. Other workers must not be given the work or task refused unless the worker has been advised of the reason for refusal in the presence of a health and safety committee member that represents workers, or a health and safety representative.

The above guidelines are meant to educate workers on their basic right to refuse work believed to be unsafe. Refusals that are done in good faith cannot be subject to any reprisals from an employer, and workers have a duty to report any unsafe work immediately. For a comprehensive view of protection granted under refusal of unsafer work, refer to section 43 – 53 of the Occupational Health and Safety Act (Ontario).

Ending Fixed Term Contracts: Is a typical severance package sufficient

| October 2nd, 2017 | No Comments »

In the case of Howard v. Benson (2016), the Ontario Court of Appeals cleared up any uncertainty regarding employers ending fixed-term employment contracts prematurely. In the case, the court ruled that fixed-term employment contracts require employers to pay the employee the reminder of what would have been earned had the contract not been ended prematurely. In other words, a typical severance package or notice is not sufficient. There is an exception, however. For fixed term contracts that contain a termination clause, the provisions of the clause would apply given it complies with minimal standards legislation.

Given recent developments, employers are held to rigorous standards when drafting such clauses as any uncertainties in language may render the clause invalid. This makes it imperative for employers to seek legal assistance when implementing termination clauses within fixed-term employment contracts. In the event the clause is found unenforceable, the balance of the contract would be owed to the employee.

Employers should also be aware that an employee’s duty to mitigate damages does not apply when the employer decides to prematurely end a fixed term contract without a termination clause. Normally, if an employee does not mitigate damages by searching for comparable employment during the notice period, the courts will award less in damages to the employee.  But in the case of fixed-term contracts, employers will owe the remaining balance of the contract regardless of the employee’s efforts to mitigate damages. This makes it all more important for employers to implement a termination clause. Always seek the assistance of an employment lawyer when implementing termination clauses within fixed-term contracts to ensure the clause is enforceable if challenged.

How Does an Employer Legally Alter an Existing Employment Contract?

| September 29th, 2017 | No Comments »

Unilateral changes to an employee’s contract are not legally binding. In the event that an employee would dispute such a change, there is a good change the employee will be successful. As an employer, however, there may be instances where an important business goal or objective depends on alterations to employees’ existing employment contracts. There may, for instance, be a desire to alter compensation schemes so that incentives match projected business goals. Whatever the case may be, there is only one way to change an employment contract legally.

In order for an employer to change an employee’s employment contract, the employer must give the employee ‘consideration’. This legal term simply means an exchange of a mutual benefit. The simplest way to offer consideration would be to give the employee a sum of money for agreeing to the new terms of the contract. There are other things an employer can offer other than money. As long as it is a benefit to the employee, the exchange should meet the requirement of consideration. Some examples may include enhanced benefits, a promotion, or an increase in vacation time.

In addition to consideration, timing is also key. Employers must offer the consideration at the time the contract is signed and allow the employee a reasonable time to consider the offer. Employers must also clearly communicate the end the existing contract and the start of the new contract. It is important that these legal requirements are met so that employers are not faced with unenforceable contracts. Always seek the assistance of an employment law expert when seeking to change existing employment contracts.

When is a non-solicitation clause not enough?

| August 11th, 2017 | No Comments »

Non-solicitation clauses prohibit an employee from actively pursuing clients of the employer when the employment relation has ended. To be enforceable, the clause must have a time limit that is reasonable. Spatial limitation (or a geographical scope) in a non-solicitation clause is becoming less common and less necessary due to the advancements of telecommunications technology and organization of service work. Overall, any restriction that goes beyond an employer’s business assets will be deemed unenforceable.

Non-solicitation clauses are usually all that is necessary to protect an employer and their assets from an employee that resigns. In exceptional circumstances, however, employers may instead need to use a non-competition clause to protect their business. Non-compete clauses prevent an employee from pursuing employment in the same or similar capacity once the employment relation has been terminated. in other words, they are not allowed to compete against their former employer. Non-competition clauses must have a defined geographic and time limit to be enforceable. These limits must be clearly stated as any ambiguity will render the clause unenforceable. Courts are also reluctant to enforce non-competition clauses because it limits the employee’s ability to earn a living. This is why only under exceptional circumstances will a non-competition clause be enforceable.

Exceptional circumstances are usually for employees that occupy key senior or managerial roles with very close relations with customers or trade secrets that would severely hurt the employer’s business if the employee left to a competitor. With regards to clients, exceptional circumstance would entail a relationship with clients that is to the exclusion of anyone else. This means that the employee, in the eyes of the client, essentially is the business. Under such circumstances, an employee leaving to a competitor would likely result in former clients following the employee without being solicited. In such instances, a non-compete clause would be necessary to protect an employer’s business.

Overall, non-compete clauses must only be used when necessary. When conditions warrant a non-compete clause, the clause must be carefully drafted, as any ambiguity will render the clause unenforceable. It is important that employers seek the advice of an employment lawyer when considering a non-compete clause as such instances are rare and need legal expert analysis

Employment Contract – What to Include and Why

| June 20th, 2017 | No Comments »

A written employment contract is essential for employers and employees to minimize future disputes and the risk of costly litigation.  If properly drafted, an employment contract will clearly out the respective rights, obligations and expectations of the employer and employee. In preparing an employment contract, here are some of the most salient features to consider:

  1. Overall Clarity: an employment contract should be written in clear and precise language. In circumstances where its terms are vague or ambiguous, the courts will apply an interpretation that is least favourable to the party responsible for its drafting.
  2. Independent Legal Advice/Review: the employer should provide the employee with a reasonable opportunity to review and obtain independent legal advice before signing an employment contract, to preclude claims by the employee that it was signed under duress and therefore unenforceable.
  3. Signing and Acceptance: an employment contract should be signed before employment is commenced in order to avoid issues concerning its enforceability. If a contract is signed after employment was commenced, the employer should ensure that it provide additional consideration to the employee (g., a raise or bonus).
  4. Scope of Employment: the employment contract should clearly set out the employee’s title, duties and responsibilities. An employee’s duties and responsibilities cannot be unilaterally altered by the employer during the course of their employment. Therefore, in order to prevent claims of constructive dismissal, the employment contract should clearly state that the employee understands and accepts specific changes to conditions of employment, such as changes to salary, work location or responsibilities.
  5. Probation Period: the employment contract should clearly state whether there is to be a probationary period during which the employee could be dismissed for any reason, without pay or notice. If so, it should stipulate the length of such probationary period.
  6. Termination Clause: the employment contract should clearly state the means by which either party can terminate the employment relationship. In the case of termination for “just cause,” the employment contract stipulate what grounds will constitute “just cause.” For terminations “without cause,” it should provide for at least the minimum requirements for “notice” or “pay in lieu” of notice under the Employment Standards Act (“ESA”).  The employment contract should also make clear that in the event of termination of their employment, an employee will receive statutory severance pay (if applicable), and benefits continuation for, at the very least, the length of the ESA notice period.
  7. Restrictive Covenants: restrictions on post-employment activities are viewed by the courts as restraints of trade, and therefore are generally difficult to enforce. This is especially true in the case of a non-compete clause.  If some form of restrictive covenant is necessary, an employer should consider a non-solicitation clause that is narrowly aimed at prohibiting an employee from soliciting its customers, clients, suppliers or employees.
  8. Compensation: the employment contract should clearly set out all terms of compensation, including salary, health and medical benefits, life or disability insurance, stock options, bonuses or car allowance.
  9. Compliance with Statutory Minimums: an employment contract must comply with all basic statutory minimums under the ESA, including but not limited to, minimum wage; notice of termination (pay in lieu thereof); and vacation with pay.

Additionally, employers and employees should particularly note and account for the proposed amendments to the ESA, such as the increases to minimum wage and vacation allowance; personal emergency leave; and the risk of misclassifying employees as “independent contractors.”

If you require an experienced lawyer to prepare or review the terms of an employment contract, please contact one of our lawyers at Whitten Lublin.

 

Author: Sezar Bune, Whitten & Lublin

Probationary period: Common Law v. Employment Standards Law

| June 7th, 2017 | No Comments »

It is commonly assumed that the probationary period is an implied condition of employment. Although the probationary period is part of employment standards law – for instance, the Employment Standards Act (2000) in Ontario stipulates that employees employed for less than 3 months are not entitled to statutory notice – this does not mean that probation is an implied term of employment. Employees that are not subject to a probationary period clause may be awarded notice pay at common law in the event such issue is brought to court.

Including a probationary clause is especially important when dealing with highly skilled employees, as they would be entitled to a longer notice period if challenged in court. The clause should demonstrate that each party contemplated the need to test each others’ suitability, and the option for either party to choose to end the employment relation within the set probationary period. It is also necessary to ensure that the probationary clause adheres to employment standards legislation, as failing to do so will render the clause unenforceable. The probationary period, therefore, cannot be longer than what is stated in employment standards law ­– in Ontario, probation is a three-month period.

The courts have outlined the common law standards of termination during the probationary period that would relieve employers of a notice requirement.  In the case Mision v. Bank of Nova Scotia (1994) heard by the Ontario Supreme Court, there were guidelines outlined for the employer when demonstrating  that the employee was not suitable during the probationary period. Firstly, the employer should be able to justify the discharge of an employee on probation. This burden of proof is less than what is required for ‘just cause’ after the probationary period has ended. During the probationary period, the employer must demonstrate that the employee was not suitable, which may include more subjective reasons such as character, compatibility, uncertainty of future performance or their ability to meet business objectives, and so forth. The employer’s judgment towards the claim of unsuitability will not be questioned, however, the motivation for dismissal must be shown to be in good faith and not for unjustifiable reasons.

Overall, employers should be prepared to support claims of unsuitability as much as possible. Setting out instances that demonstrate unsuitability within the probationary clause would aid in this objective in the case it is challenged in court. Employers should also be cautious of limiting sick days to zero, as the courts have not been favourable to employers when including unpredictable circumstances within probationary clauses.

Employment Insurance Eligibility: Leaving Employment to Accompany a Relocating Spouse/Child

| June 7th, 2017 | No Comments »

Individuals that voluntarily leave their employment are not entitled to Employment Insurance (EI) benefits unless they leave upon a justifiable cause under the Employment Insurance Act (see section 29 c for a complete list). In addition, individuals must also be available to work while receiving EI benefits to maintain their eligibility. One reason that qualifies as a ‘just cause’ includes accompanying a spouse or a dependent child that has relocated. A case that illustrates this is a claim by Ms. Annie Laroche archived as CUB 57793 under the Government of Canada’s website (www.ei.gc.ca).

Ms. Laroche and her husband shared the responsibility of caring for their young child. Ms. Laroche worked evenings and her husband worked days, each caring for their child when the other was at work. Ms. Laroche’s husband eventually accepted an employment offer in a farther region. Ms. Laroche relocated with her husband and child, as they were both the caregivers. Initially, Ms. Laroche was denied benefits because she did not make herself available to work by securing childcare arrangements immediately after leaving her employment. However, this was overturned. Ms. Laroche was found to have just cause for leaving her employment due to her accompanying her relocating spouse, which also affords an individual a reasonable amount of time to secure living and childcare arrangements.

The takeaway from the case here is that voluntarily leaving employment to follow a relocating spouse is a ‘just cause’ and therefore entitles an individual to EI benefits. Further, an individual does not have to immediately make themselves available to work to continue eligibility for EI – there is a reasonable amount of time given to secure living and childcare arrangements

Proposed Changes to Labour and Employment Legislation

| May 31st, 2017 | No Comments »

The Ontario government has announced its intention to introduce several widespread reforms to labour and employment laws in the province.  The reforms, which will be set out in The Fair Workplaces, Better Jobs Act, 2017, are meant to strengthen legal protections for workers in Ontario.

New Minimum Wage:

The proposed reforms would see minimum wage increase to $14.00 by January 1, 2018, and increase again to $15.00 by January 1, 2018.  The special minimum wages for liquor servers, students under age 18, hunting and fishing guides, and homeworkers will increase by the same percentage as minimum wage.

Penalties for Incorrect “Independent Contractor” Classifications:

The new legislation attempts to discourage employers from misclassifying employees as independent contractors by setting out penalties such as prosecution and monetary penalties.  The proposed scheme would require employers to prove that an individuals is not an employee, if that individual disputes their status.

Expanded Leaves of Absences

Under the proposed reforms, employees would be entitled to a new type of 104-week unpaid Leave for Death of a Child.  Employees would remain entitled to a separate 104-week unpaid leave for Crime-Related Child Disappearance.  Family Medical Leave would be increased to 27 weeks in a 52-week period.  Employers would be prohibited from requesting a sick note from an employee taking a Personal Emergency Leave.  Finally, all employees would be entitled to 10 Personal Emergency Days per year, and two of those Emergency Days must be provided with pay.

Proposed Protections for Employees’ Schedules:

  • Employees would have the right to request schedule or location changes after having been employed for three months with the same employer without fear of reprisal.
  • Employees can refuse to accept shifts without reprisal if their employer asks them to work with less than four days’ notice.
  • If a shift is cancelled within 48 hours of its start, employees must be paid at least three hours at their regular rate of pay.
  • Employees who regularly work more than three hours per day, but upon reporting to work are given less than three hours, must be paid three hours at their regular rate of pay.
  • When employees are “on-call” and not called in to work, they must be paid three hours at their regular rate of pay for each 24 hour period that they are on-call.

Author: Simone Ostrowski, Whitten & Lublin