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.

Acceptable Scope of a Non-Solicitation Clause: A Real-Life Example

| April 17th, 2017 | No Comments »

For most employees, a non-solicitation clause should be all that is necessary if an employer is seeking to protect his/her business interests (clients) from employees who leave to a competitor. However, employers must be careful with the wording of such clauses because the clause must only go as far as necessary to protect the employer’s business interests. This is the ‘reasonableness’ standard with which the courts will review a non-solicitation clause. Any restrictions on the employee’s freedom to work must be necessary to protect the employer’s business or the clause will be unenforceable.

Non- Solicitation Clauses

There are a few things that a non-solicitation clause must contain to be enforceable. The clause must have a limited geographic scope and time in place that is reasonable. Further, a non-solicitation clause must be limited to the act of solicitation. If the wording of the solicitation clause goes beyond the solicitation of the employer’s client base, then it is likely to place unreasonable limits on the employee’s ability to freely compete and earn a living. Lastly, it is wise to limit the act of solicitation so that it is not too burdensome. This may entail only restricting the solicitation of the clients that the employee dealt with or the types of clients that the employee works with. To better understand the limits of a non-solicitation clause, the case of Donaldson Travel Inc. v. Murphy et al. 2016 is useful to review.

Donaldson v. Murphy, 2016 (Superior Court of Justice – Ontario)

In the case, Murphy was a former employee of Donaldson Travel that left to work for a competitor company named Goliger. One of Donaldson Travel’s claims was that Murphy solicited clients and therefore violated the non-solicitation clause that Murphy had signed. The clause reads:

Mary agrees that in the event of termination or resignation that she will not solicit or accept business from any corporate accounts or customers that are serviced by … Donaldson Travel, directly, or indirectly. (emphasis added)

The court deemed this clause unenforceable for several reasons. Firstly, there was no limit in time and geography. As it is worded, this clause would never expire and would apply anywhere in the country. This is unnecessary to protect Donaldson Travel’s business interests. Secondly, the phrase “or accept business from” goes beyond the act of solicitation. This places an unreasonable restriction on Murphy’s ability to earn a living because it is not necessary to protect Donaldson’s business interests. Lastly, the term “any corporate account” is also too broad. It would be reasonable to limit the solicitation of clients that Murphy dealt with; however, the wording here would prevent Murphy from conducting business with any clients of Donaldson, even the ones that Donaldson establishes after Murphy had left. This is not needed to protect Donaldson’s business interests by the departure of Murphy.

Closing Remarks

The burden is placed on the employer to carefully draft such clauses and to show that the clause is reasonable. The wording of the clause is important as the courts will not look beyond the wording of the clause, nor will they change the clause so that it is legally enforceable. For employees that are not in a managerial role, a non-solicitation will almost always suffice in protecting an employer’s business interests. It is important to seek the assistance of an employment lawyer when seeking to protect business interests through non-solicitation clauses.

Health and Safety: Can a Corporation be held Criminally Negligent for the Conduct of Supervisors?

| April 11th, 2017 | No Comments »

Upon other employer duties relevant to health and safety, the duty to provide competent supervisors may be the most important. An employer may have all the requirements of a safe workplace, however, having a supervisor that is negligent may result in criminal charges against the business resulting in sever fines. Criminal negligence charges are for extreme cases such as the one below.

R. v. Metron Construction Corporation

The case of R. v. Metron Construction Corporation (Metron) is an important case to be aware of and also a sad one. In this case, Metron was given a project of restructuring the balconies of several high-rise buildings. The president of the company hired a project manager, whom then hired a supervisor for the workers on site. Swing-stage scaffolding was needed for the workers to work on the buildings’ exterior balconies. Life lines were required to be worn by each worker and were attached to each swing-stage, ensuring any falls wouldn’t result in injury or death. The supervisor was responsible for insuring that safety procedures were followed.

The company ordered additional swing-stage scaffolding that did not have proper labels for maximum capacity as required under the Ontario Health and Safety Act (OHSA). On December 24th, 2009, 6 workers including the supervisor boarded onto a swing-stage to travel to the 14th floor. The normal practice is for only 2 individuals to be on a swing-stage at once. The combined weight led to the collapse of the swing-stage, leading to 4 deaths (including the supervisor). There were only 2 life lines available on the swing-stage, only one of which was used properly – the worker that properly used the lifeline was uninjured and the other that used it improperly was injured. The use of a lifeline is also a regulation required by the OHSA. A report concluded that the combined weight and the faulty design of the swing-stage was the reason for the collapse. Further, had all workers used lifelines, the deaths would be prevented. A toxicology report also revealed that workers were under the influence of marijuana, including the supervisor.

Decision:

Metron was found criminally negligent under the Criminal Code for the conduct of the supervisor. This was due to the degree of blameworthiness and severity of the accident. Specifically, the departure from the 2-person limit norm, the improper use of lifelines, workers being under the influence of marijuana, and the fact that the supervisor allowed all this to take place were all factors leading to this decision. The fine was set at $750 000, from the initial $200 000 in order to denunciate and deter such negligence that place workers in danger.

Takeaway:

Corporations can be found criminally negligent for the actions of anyone in a supervisory role. Specifically, the court maintained that the seriousness and the corresponding penalty is not to be diminished by the fact that the negligence was the fault of the supervisor rather than a more prominent figure of the company. It is therefore important for human resource and health and safety professionals to be aware of the importance of having competent and diligent supervisors responsible for the health and safety of workers. Employers must ensure that supervisors are properly trained and that all standards are followed so that unnecessary accidents are avoided. Training, inspections, workplace policy and proper lines of communication should all be used as a means of maintaining high standards of health and safety. In addition, any violations by supervisors should be dealt with in a serious manner with discipline imposed accordingly. If there are any concerns in your workplace regarding health and safety policy and compliance, please seek the advice of an employment lawyer.

Termination Clauses and Contracting Out: Clarity Given by Recent Ontario Appeals Court Ruling

| March 13th, 2017 | No Comments »

Employment Standards Act Review:

The Employment Standards Act (2000) grants employees minimal guarantees. In terms of termination, the Employment Standards Act (ESA) provides one week of notice or pay in lieu for every year of service, for a maximum of 8 weeks. Severance pay is a separate payment that employers must provide if their payroll exceeds 2.5 million or if the employee was one of 50 employees that has been terminated within a 6-month period. In addition, employers are to provide all benefits throughout the notice period or pay in lieu. Employers are legally prohibited from contracting out of the ESA, unless the clause offers a greater benefit to the employee. In the instance where an employment contract offers less than the minimum provided under the ESA, then the provision in the contract is void. In this instance, the courts will award the employee common law notice (damages), which are often considerably more than minimal standards. A recent case heard before the Court of Appeals for Ontario highlights the importance of unambiguous language in termination clauses, as any ambiguity will render the clause unenforceable.

Facts from Wood vs. Deeley (OCA 2017):

 In the case, Wood served 8 years as a Sales and Event Planner, earning about $100 000 annually including benefits. Wood’s termination clause provided 2 weeks of notice for each year served (or pay in lieu) and stated that Wood is only entitled to the terms set within the termination clause of the employment agreement. Deeley ended up paying Wood 21 weeks worth of salary, which was more than the minimum Wood would have received under the ESA. Deeley argued that the extra payment provided after termination covered Wood’s benefits. Wood argued that the termination clause was unenforceable, however, because it excluded benefit pay and severance pay as per the wording of the clause. The Appeals Court of Ontario agreed, ruling that the clause was void because it contracted out of the ESA. Only the cause itself was to be considered in terms of enforceability, which means remedies implemented afterwards are irrelevant. Wood was awarded 39 weeks of notice pay (9 months), Wood’s common law entitlement.

Main Issues in the Termination Clause:

All-inclusive clause:

The language used in the termination clause effectively limited Wood’s entitlements to those provided in the clause. This meant that anything not covered in the clause but guaranteed under the ESA to not apply. The ESA entitles employees to their benefits during the notice period. The clause did not mention anything about Wood’s benefits and therefore was found to contract out of the ESA.

Ambiguous use of ‘notice pay’:

The termination clause Wood was subject to provided more than the minimum required notice pay under the ESA. However, notice and severance pay are two separate entitlements under the ESA, and combining both under “pay” here created ambiguity. For example, the termination clause entitled Wood to 2 weeks notice for every year of employment, or pay in lieu. If 10 weeks were given as notice, then the remaining 6 weeks were not enough to cover the minimum amount of severance pay that Wood was entitled to under the ESA. Rather, the termination clause should have allotted the necessary amount to each, severance and notice, rather than combining both under “pay”.

 

This case shows that employers are held to a rigorous standard in terms of drafting employment contracts. This reflects the purpose and intentions of the ESA. The ESA aims to protect employees that are unaware of their employment rights and the court seeks to interpret these clauses in ways that encourage employers to draft clauses that comply with minimal standards. As such, when determining the legal compliance of a termination clause, only the clause itself is considered and any remedies the employer seeks to implement at the time of termination will be irrelevant to the enforceability of the clause. It is important to seek legal advice from an employment law expert to ensure termination clauses are properly drafted. Any ambiguity will either be interpreted by the courts in the most favourable way for the employee or be deemed unenforceable, which entitles the employee to common law notice (damages). Again, common law notice (damages) is usually far more than minimal standards.

Establishing Whether an Employment Relationship Exists

| December 13th, 2016 | No Comments »

employment relationship agreementBoth parties have an interest in determining if there is in fact an employment relationship between the employer and individual providing service. If there is no employment relationship, then the Employment Standards Act (ESA) does not apply. For employers, this means that they are not liable for wrongful dismissal or other obligations that otherwise would apply under the ESA. Conversely, individuals providing service have an interest in establishing the existence of an employment relationship to make a wrongful dismissal claim in the appropriate situation.

How to Establish Whether There is an Employment Relationship

The relation between an individual providing service for an organization may be ambiguous at times – an example includes long-term contracted employees. The tests developed by the courts were established overtime and are used to analyze the fundamental nature of the employment relationship, and ultimately whether there can be a wrongful dismissal claim. The four tests below are not used in isolation by the courts; the courts will apply all relevant factors. As such, the question of whether there is an employment relationship can be complex and warrant the expertise of a legal expert. The tests below are not comprehensive and are meant to serve as a general guide.

The Control Test

The control test views the essence of the employment relationship being a question of control over the work performed. The most important aspects of this test include the discretion over payment, the control over the timing, type and manner of work, and disciplinary power. If the individual is subject to a high degree of control over the duties being performed, terms of payment and discipline imposed by those receiving the service, this is indicative of an employment relationship.

The Fourfold Test

In the case of professional or highly skilled individuals, the control test may not truly capture the essence of the employment relations as skilled employees tend to have more autonomy and control over their work. The fourfold test seeks to determine the owner of the business. Likewise, the test analyses the degree of control the employer has over the work, the ownership of tools, who stands to make a profit, and conversely, who is at risk of a loss. Generally, if the employer owns the tool and equipment and bears most of the risk for a loss, then this is indicative of an employment relationship.

The Organization Test

This test is usually a last resort used in conjunction with some of the factors in the control or fourfold test when no clear answer is rendered. This test seeks to establish whether the individual’s services are fundamental to the business or if the individual is dependent upon the organization as their main source of income. It is used as a broad overview in determining whether an employment relationship exists.

The Permanency Test

This test is most appropriate for contract employees and seeks to establish the overall stability of the relationship. Indicators of an employment relationship include the employer providing training, selecting the individual for employment rather than having a staffing agency make the placement, and continued supervision. In such instances, a long-term contracted individual may be seen as an employee rather than a contract worker.

Q&A: Unjust Performance Review?

| May 19th, 2015 | No Comments »

QUESTION 

This concerns an unjust annual performance appraisal that will affect my salary. My manager is expecting me to sign or to contest, the bogus appraisal this week. Should I do that? What options do I have?

ANSWER

You are not required to sign an unjust performance review that you find to be “bogus”.  If you disagree with the fact and content of the review, you should contest it immediately.  Otherwise, it will go undisputed in your file and your employer could use it against you to allege cause for your dismissal.  Terminating your employment for cause would dis-entitle you from severance.

In your rebuttal, you should include the following:

  • Your version of the story;
  • Any mitigating circumstances;
  • Whether there are any inconsistencies between the negative appraisal and your previous reviews or achievements;
  • Whether your performance standards were unreasonable;
  • Whether you lacked the support needed to meet your performance standards;
  • Whether your deficiencies were communicated to you before the appraisal;
  • Whether there were any inequities in the evaluation process;
  • Whether there were any inconsistencies between the appraisal process and company policies; and
  • Your need for time to improve.

You should also make sure to:

  • Challenge the forthcoming reduction in salary;
  • Document your disagreement in writing; and
  • Request that your rebuttal be placed in your file.

Applying these guidelines will allow you to build your own documentary campaign against cause for your dismissal.  If you think your employer is building a case against you, consult with an employment lawyer today.

I worked long term and disagree with these changes- what next?

| April 27th, 2015 | No Comments »

I have worked as a courier for 26 years.  This week, my company hired a third party courier company who will handle all courier deliveries.  I have been offered an office job in the lab, which has slightly less pay overall.  I don’t agree to these changes.  Do I have any recourse?  

If your job and responsibilities are going to be substantially different along with a pay cut, this is usually considered as the type of change that you may not have to accept.  You should tell the employer that you disagree with the changes and insist that your job and pay remain as before.  If, after 26 years on the job, they are not prepared to act reasonably with this request,  you could treat yourself as though you have been terminated, by leaving your job and suing for lost wages while you look for another job.

Q&A: Employment contracts and fundamental changes

| April 20th, 2015 | No Comments »

I have an employment contract stating my work location to be downtown. I have been told however that I will now be working for a satellite office which is 20KM away.  This may not seem like a huge distance but with the traffic in Toronto during the morning and evening commute times, I would be in my car for 45 minutes longer in each direction.  This seems unfair.  Do I have any right to reject the change?

You can reject changes to your job that fundamentally alter your working conditions.  This is known as a constructive dismissal.  A new work location is sometimes considered a fundamental change but it will depend on the circumstances.  If your contract guaranteed you a downtown Toronto location and that was important to you, the employer’s decision to change that term should be considered a fundamental alteration.

In a situation like this, you should make it known to your employer that you reject the change.  If the employer will not resume your employment at the downtown location, and insists that you work from the satellite office, you may be able to consider yourself as constructively dismissed, leave the workplace and sue for lost wages while you look for other work.

Employee Work Skeletons Can Harm Future Employment

| April 16th, 2015 | No Comments »

Employees-beware of your work skeletons! Social media can be a good source for many things, even handy for employers to uncover employee work skeletons. Potential job candidates and employees need to be cautious about what they post and make public. More and more, employers are relying on this information and employees should be aware on how and when employers can rely on this information.

Toronto Employment lawyer, Daniel Lublin is an expert in the employment law field. His cautions consist of the following:

For employees

  • Upon termination- employees are still subject to allegations of misconduct; and
  • If your skeletons are severe and you cannot risk exposure- do not challenge your employer’s decision. Some employment skeletons can be more harmful than beneficial to both your case and your career.

For employers

  • When employee skeletons come to light following termination, it can be reason for a ‘just cause’ termination. Employers should consult with a law expert to find out their rights.
  • When employee misconduct comes to light and factors of this action affect the severance agreement, employers may be entitled to cease further payments. However, this is determined through tests that only an experienced legal professional can detect.

Read Daniel Lublin’s Globe and Mail column and full article Your old job skeletons can come back to haunt you

Q&A: Resignation rights

| April 13th, 2015 | No Comments »

I have provided my current employer with a resignation letter that included a proposed resignation date in one month’s time.  I was, however, told to immediately leave the workplace.  I have not been paid for the one month’s notice that I was prepared to provide.  I am wondering whether or not I am entitled to payment for this time frame, considering I do not presently have another job.  

While an employer can ask your to leave work before your proposed resignation date, it must nevertheless provide you with the salary and benefits that you would have earned had you actively worked for the entire one month notice period.  By relieving you of your duties and not paying you for the one month notice period, the employer effectively terminated your employment during your resignation notice period.  Subject to any contractual clause defining the amount of notice you had to provide, the employer would typically be liable to pay you for the remaining period of notice that you provided.