How to Deal With Workplace Violence

| September 18th, 2017 | No Comments »

It is exceedingly important that businesses have clear policies and procedures in place to address workplace violence, which comply with the statutes that govern workplace violence – including the Ontario Occupational Health and Safety Act.  Under this Act, employers are required by law to prepare a written policy that defines workplace violence, provides examples of it, sets out a clear program for filing internal complaints and investigating them, and describes any other steps the company will take in relation to workplace violence.

Companies may be required in appropriate circumstances to hire an external provider both to train their staff, and to investigate incidents of workplace violence as they occur.  They are also required to provide protection from any workers with a history of violence, and to reasonably protect workers who are at risk of domestic violence.

Because workplace violence is considered a “safety hazard”, workers have a right to temporarily stop performing their duties until the issue is adequately addressed.  Employers will be required to put a safety plan in place to ensure that any risks are limited to the extent legally required.  In some cases, employers may also be expected to provide counseling services, if the workplace violence incident is of a sufficiently serious nature.

Where a company fails to comply with its legal obligations, it is at risk of substantial fines, extra attention from the Ministry of Labour, unhappy employees, reduced productivity, damages for wrongful or constructive dismissal, reinstatement of terminated employees (together with back-wages) and increased legal fees – among other things.

 

Author: Daniel Chodos, Whitten & Lublin

Terminated without notice: are discretionary bonuses part of the severance package?

| August 15th, 2017 | No Comments »

Bonuses may make up a significant portion of pay for executives, senior managers, and other high skilled employees. Upon termination of the employment relation, notice or pay in lieu is meant to place an individual in a similar place had they not been terminated. Pay in lieu is refereed to as ‘notice pay’. Notice pay is how the courts determine the amount of pay in damages that an employee that was denied reasonable notice is owed. Consistent with this principle, discretionary bonuses may need to be included in an employee’s a severance when choosing no to give notice of termination.

Discretionary Bonuses

A discretionary bonus, by definition, is awarded at the employer’s will without objective criteria. When included in an employment contract, discretionary bonus will clearly specify that the bonus is solely to the determination of the employer and may or may not be granted. Employers often will argue that since the bonus is discretionary, it should not have to be included in notice pay. However, there are scenarios where discretionary bonuses will be included as damages by the courts when assessing the amount of notice pay the employee is owed.

Discretionary Bonuses and Notice Pay

When the employee has been with the employer for many years and the bonus was paid regularly, it is likely to be included in the notice pay, especially if it composed a significant portion of the employee’s total compensation. The less often and regular the bonus was paid, the greater the chance the bonus will not be included in the notice pay. Further, courts have also determined that if current employees of a similar position and status receive a discretionary bonus, the terminated employee must also receive the payment of the discretionary bonus in their notice pay.

Final Remarks

Overall, it is important for the discretionary bonus clause to be unambiguous because any difficulty in interpretation will fall in the employee’s favour. In addition, where the bonus is labeled as discretionary in the employment contract, but in practice is subjected to objective criteria, the courts will not view this as discretionary. When dealing with executive type compensation, properly drafted contracts and practices are very important. What was initially thought to be an agreed upon contact may end up being very costly for an employer. it is advisable to seek legal expertise when drafting contracts that seek to define the limits of severance payment with regards to discretionary bonuses.

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

Constructive Dismissal – An Intolerable Environment or Culture

| July 6th, 2017 | No Comments »

When an employer unilaterally changes a fundamental term of an employee’s job, then an employee may quit and claim ‘constructive dismissal’. Essentially, what this means is that the changes to the employment relation would have left any reasonable individual with no other option rather than to quit. The employee may then claim constructive dismissal, and if successful, would be owed a severance (referred to as ‘notice pay’) as compensation.

Unilateral changes that usually trigger constructive dismissal include significant reduction of pay, demotion, discrimination, reduction of hours and so on. The cause of a constructive dismissal is usually easily identified as a single factor of significant affect. However, the courts do not necessarily look at a single factor. Constructive dismissal may result from several changes or circumstances that create an intolerable environment for an employee. The cumulative effect, therefore, would trigger a constructive dismissal.

This was demonstrated in Shah v. Xerox Canada Ltd 2000 (OCA). Shah was an employee of Xerox for 12 and a half years with a good performance record, bonuses and raises. Shah accepted an internal transfer and reported to a manager with a personality and philosophy that was not compatible with Shah’s. Shah’s new manager was aggressive in style, very outgoing and confident, assertive and combative; Shah was reserved, withdrawn, and gentle. This created uncertain expectations for Shah, as his new team encouraged an ‘empowerment’ culture, free thinking and independence, whereas Shah liked direction and structure. Shah’s new manager raised multiple performance concerns. The first critical performance review used poor factual evidence, and the second one provided poor detail and questionable claims. Shah then received 3 unexpected and unwarranted warning letters over a 2-month span, the last placing Shah on probation without defining any expectations or allowing an opportunity to respond. This also added to the mental distress Shah was experiencing in addition to stress from his personal life. Shah requested a transfer and once his manager denied him, Shah quit and successfully claimed constructive dismissal.

The court considered the cumulative effect of Shah’s change of environment. This included the change in culture, the manager’s style and treatment towards Shah, including the lack of detail contained in the warning letters, unclear expectations and unfounded claims. Whereas Xerox argued that constructive dismissal must result from a unilaterally imposed fundamental change to the employment contract, the court maintained that the focus must be on whether the employer intends to be bound by the employment contract. The cumulative effect of the multiple warnings that lacked details for corrective action signified Xerox did not intend to continue the employment relation with Shah. This, in addition to the cultural change affecting Shah, resulted in a constructive dismissal.

Overall, constructive dismissal may result from conditions not typical of most constructive dismissal causes. It is important to speak with an employment law expert if faced with an intolerable situation in the workplace that makes continued employment unreasonable.

Can You Collect Employment Insurance (EI) if Fired?

| June 27th, 2017 | No Comments »

The general rule for Employment Insurance eligibility is having lost employment for no fault of your own. If an employee is fired, there may be a chance that EI eligibility has been forfeited. When an employer dismisses an employee for misconduct, then this would disqualify an individual from being eligible for EI in Ontario. However, misconduct is often difficult to establish so as an employee, it is important not to assume ineligibility before attempting to apply.

Misconduct can include an inappropriate action that was deliberate and violated a term of employment. If termination resulted after only one act, then it had to have been misconduct that was very serious and incompatible with the conditions of employment. Otherwise, termination resulting from misconduct should have proceeded progressive disciplinary action – such as a warning, meeting and so forth.

It is important to gather any facts possible about the firing. Upon applying for EI after termination, a government agent will contact the employer to gain details regarding the reasons for the termination in relation to the misconduct. The employer will be required to justify why the misconduct warranted termination, which includes evidence of breach of contract, policy, or essential employment condition.

Once the investigation with the employer concludes, the employee will have an opportunity to accept or deny the reason(s) given for the dismissal, give his/her own version of events, and provide any witnesses if possible. The assigned agent will render a decision once considering both versions, each of which is given equal weight.

Overall, when being dismissed for misconduct, it is important to enquire and gather any information possible as to the reason for the firing. When in doubt, it is always best to apply for EI and allow the investigative process to determine whether EI eligibility will be granted.

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

Constructive Dismissal: Some common signs and considerations to make

| June 19th, 2017 | No Comments »

Constructive dismissal is a legal term that means the employer imposed changes upon the working relationship that caused the employee to quit. This, in turn, is viewed the same as an unlawful dismissal and entitles the employee damages in notice pay at the very least.

To claim constructive dismissal, the change to the employee’s job must be unilateral, meaning that the employee did not consent to the changes. In addition, the changes must also be fundamental to the employment relationship, signifying that the employer intended to end the employment relation. Courts will examine the particulars of each case to determine if the changes made amounted to constructive dismissal. Some common examples include changes in the amount of responsibility one has, having supervisory duties taken away, intentionally making the work environment intolerable (bullying, ridicule, humiliation), or a decrease in pay.

Having a significant increase of job duties without an increase in compensation may also amount to constructive dismissal, however, there are things courts look for when making this determination. Courts will look at whether the restructuring was necessary for the survival of the business, the state of the economy, and whether such changes were made in good faith and in relation to a business goal. If there is a sign that an employee agreed to the extra duties, whether implicitly or explicitly, a constructive dismissal claim will usually be unsuccessful.

When deciding to ‘quit’ and pursue a constructive dismissal claim, it is important to ask whether the changes imposed signify the employer’s intention to end the employment relation. Absent of a significant pay decrease, it is important to consult with an employment lawyer before deciding to leave employment. What may initially be seen as a fundamental change to an employee’s job may not always be the case. Alternatively, for exceptional circumstances, additional damages in addition to notice pay may be necessary to rectify the treatment to which an employee was subjected. Always seek the advice of an expert before deciding to claim constructive dismissal.

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 Requirements under 3 scenarios: Quitting, Dismissed for Cause, Dismissed Without Cause

| June 7th, 2017 | No Comments »

Eligibility Requirements for Employment Insurance

Paying into the Employment Insurance program is usually automatic, with regular deductions taken from you paycheque – individuals that are self-employed may choose to pay into EI. Further, you must have worked the minimum required hours within the last year. This falls between 420 – 700 hours depending on your geographic area. For Toronto, the required annual amount of hours is 630. Individuals must also be without an income for 7 consecutive days, be actively seeking employment and maintain a record of the specific employers contacted along with the date.

Quitting

To be eligible for Employment Insurance (EI) in Canada, your loss of employment cannot be your own fault.  This means that if you voluntarily quit your employment you will not be eligible to claim EI.

Dismissed for Cause

If an employer dismisses an employee for cause then the employee is usually not entitled to EI. Being dismissed for cause means that the employee has done something wrong to warrant a dismissal without notice or a severance package. When an employee is dismissed as a result of a single incident, the wrongful act must be fundamentally incompatible with the employment relation, making continued employment unfeasible. Examples may include theft, workplace violence, or breach of confidentiality.

Dismissal for cause can also happen as the last step of progressive discipline. This requires an employee to have committed multiple wrongs, receiving a disciplinary measure for each instance. Whatever the case may be, if you feel that dismissal was not warranted, it is important to seek legal consultation. In addition to missing out on EI benefits, an employer would also owe additional payment in damages.

Dismissed Without Cause:

If an employer dismisses an employee without cause, the employee is owed notice or pay in lieu. This does not disqualify an employee’s eligibility for EI – employees that are dismissed without cause are eligible to apply for EI benefits, providing they meet the criteria mentioned above.

 

Unwritten Terms of Employment Contracts

| May 23rd, 2017 | No Comments »

Contracts- Implied Terms:

It is not uncommon for terms of employment between workers and employers to be unwritten. Disputes between an employee and employer may arise over past verbally-agreed-upon terms, established unwritten practices, and more. This can result in litigation and unseen costs resulting from workplace conflict. In general, the courts will attempt to determine what terms would have been agreed to between the parties if they were to produce a written contract. This is done by examining the common practices within the workplace, interactions between the employee and superiors, and so forth. Employees and employers also have duties that the courts established through common law, whether or not it is in writing.

Common Law Employer Duties:

Employers have a duty to pay their employees. There must be a regular pay period set by the employer, and this means that employees are not to be paid in arrears. The law recognizes the inherent power imbalance between employees and employers, and paying in arrears would subject employees to too much control. There are fines and penalties associated with failing to establish a regular method of pay – weekly or biweekly is most common.
Employers also have a duty to provide employees with a safe workplace and equipment. If an employee suspects they are being put in harm’s way, then they have the right to refuse any work they believe is unsafe. There are protocols for this under the Ontario Health and Safety Act. This includes the employee first notifying a supervisor, the supervisor then eliminating the hazard to the employee’s satisfaction, and, if no resolution is agreed upon, an inspection by the Ministry of Labour to determine if there is a hazard.

Employers are also obligated to provide notice or pay in lieu in the event an employer wishes to terminate an employee. This pay or notice is based upon an estimate of how long an employee would need to find comparable employment.

Common Law Employee Duties:

Employees have a duty to obey. This is fundamental to the employment relationship, as workers are providing their service in exchange for pay. Willful disobedience can lead to a summary dismissal, which means that the employer can terminated the employee without severance pay or a notice. The exception to the duty to obey is when an employee is asked to do something illegal or perform work that is unsafe. Employees also have a duty to exercise skill and care while doing their job. This includes using the skills required and also not being negligent while performing job duties.

Employers also cannot intentionally cause an employer harm, which falls under an employee’s duty of good faith and fidelity. This includes protecting trade secrets of the employer even after employment has ended, not pursuing or completing other work during hours of work, work for a competitor and so on.

Conclusion:

The above duties are a part of every employment relationship within Canada. For oral agreements that go beyond theses duties, drafting a carefully written agreement may avoid future disputes over misunderstandings within the workplace and also avoid costly litigation. For complex scenarios and terms of employment, it is best to seek an employment law professional. For any related issues, Whitten and Lublin Employment Lawyers have a team of professionals dedicated to providing great service.