Termination clauses in Ontario employment contracts are crucial in defining the conditions under which an employment relationship can end. Although aiming to provide clarity, these clauses are also fraught with difficulties.

The law surrounding termination clauses has undergone another change in a recent case before the Superior Court of Justice. This blog will discuss the case and its potential effect on how termination clauses must be drafted to avoid being struck down by the courts.

Termination Clauses in Ontario

Termination clauses are provisions in employment contracts that outline the conditions under which the employment relationship may be ended. These clauses specify the rights and obligations of both the employer and the employee in the event of termination and typically address essential aspects such as notice periods, termination pay, and other entitlements that may apply when the employment relationship ends.

In Ontario, termination clauses must comply with the Employment Standards Act, which sets out minimum standards for termination pay and notice periods. The Court of Appeal has previously ruled that a termination clause was unenforceable where its “for cause” provisions violated the Employment Standards Act. The “without cause” provision was also void, meaning the employee was entitled to common law notice of payment in lieu.

Employee Brings Claim for Wrongful Dismissal

In Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, the Superior Court of Justice went further and found that an employer’s discretion to terminate an employee for cause is not unfettered, and drafting a termination clause that gives an employer such discretion is not enforceable.

The plaintiff was an employee of the defendant since October 2021. She signed a fixed-term employment agreement in November 2022, slated to end in December 2024. The fixed-term employment contract included a Waksdale-esque termination clause, where the employer could terminate the contract on a with-cause or without-cause basis. Specifically, the language of the without cause provisions was:

“The Township may at its sole discretion and without cause, terminate this Agreement and the Employee’s employment thereunder at any time upon giving to the Employee written notice as follows…”

In January 2023, she was terminated without cause. She was paid termination pay, and her benefits were continued for the applicable notice period. She then brought a claim for wrongful dismissal and moved for summary judgment.

Plaintiff Argues Termination Clause Violates Employment Standards Act

The plaintiff argued that the termination clause in her employment contract was illegal and could not be enforced because:

1. The clause allowed the employer to withhold termination and severance pay if the plaintiff is terminated for cause, which goes against the Employment Standards Act;
2. The clause let the employer withhold statutory termination and severance pay if they terminate for cause, using a common law standard lower than the Employment Standards Act;
3. The contract included employee conduct that was not covered in the Employment Standards Act, such as a “for cause” dismissal;
4. The clause excluded payment of all “regular wages” and only mentions base salary, which violated the Employment Standards Act; and
5. The clause stated the employer had “sole discretion” to terminate at any time, but the Employment Standards Act restricts termination in certain circumstances.

Conversely, the defendant employer argued that the contract did not violate the Employment Standards Act and that it is unambiguous.

Court Finds Clause Violates Employment Standards Act

The judge first examined the law on the interpretation of employment contracts, which requires courts to interpret it “as a whole and not on a piecemeal basis.” In this sense, the judge confirmed that once a portion of the termination clause violates the Employment Standards Act, the rest of the clause does, too. It is also irrelevant to the interpretation of whether the employer relied on the termination for cause provision for ruling that it would be unenforceable.

Ultimately, the judge found that this case’s fixed-term employment contract violated the Employment Standards Act. The judge noted that the Employment Standards Act did not define for cause, only the situations where an employee would not have the right to termination pay, such as being guilty of willful misconduct. The contract gave the employer the right to withhold termination pay and severance pay in case of dismissal for cause, contravening the Employment Standards Act.

Employer Does Not Have “Sole Discretion”

The judge also agreed with the employee’s arguments regarding the payment of wages and the employer’s discretion. On the latter, the judge noted that the Employment Standards Act prohibited the employer from terminating an employee after an employee’s leave or in reprisal for attempting to exercise a right under the Employment Standards Act. The judge found that the employer’s right to dismiss “is not absolute.”

Prior to this case, employers were required to draft termination provisions carefully so that they did not contravene the Employment Standards Act, specifically as they dealt with for-cause termination. However, with this judgment, employers must be careful in defining their discretion when terminating employees without cause.

Contact the Employment Lawyers at Baker & Company in Toronto for Advice on Employment Agreements and Terminations

At Baker & Company, our trusted employment lawyers help our clients navigate various aspects of employment relationships and workplace disputes, including severance pay, wrongful terminations, contract negotiations and Employment Standards Act compliance. Whether you are an employee seeking assistance with a termination claim, or an employer looking to mitigate risk before taking action, our lawyers are ready to help. To speak with a member of our employment law team, contact us online or call our office at 416-777-0100.

When an employee’s employer is bought out by another company, the employee may either lose their job, or alternatively, arrangements may be made to retain the employee in an acquisition. When an employee is retained, it is crucial to ensure that the employee and the new employer are on the same page about the terms of the employment relationship. If a mutual understanding is not reached, it could lead to contract analysis by a court at a later date.

The appellants were employed at a hedge fund that was sold to the respondent

In Bowen v JC Clark Ltd, a recent case before the Ontario Court of Appeal, the appellants were portfolio managers of a hedge fund. The respondent acquired the hedge fund and the appellants were hired as part of that acquisition. The appellants worked for the respondent for one and a half years, from December 2012 until July 2014, when they were terminated without cause.

In lieu of notice, the appellants were given two weeks’ salary in addition to $577.00. The appellants started an action against the respondents seeking performance fees totalling more than $1.3 million, which they claimed was a term of their employment contract. The trial judge dismissed the action and the appellants appealed that decision to the Ontario Court of Appeal.

The appellants believed their new contract included performance fees earned in 2014

The hedge fund initially hired the appellants in 2003. Under the previous owner, Mr. Braun, the appellants grew from junior positions to managers of the fund by the spring of 2012. When Mr. Braun sold the company to the respondents, he negotiated a term that he would remain at the company to focus on investor-client relations. He also requested that the appellants be hired to manage the day-to-day activities of the fund. Mr. Braun and the appellants were supposed to be the three portfolio managers of the fund.

In finalizing these terms, Mr. Braun signed a “combination agreement”, which provided that Mr. Braun would receive a 40% share of the management fees and the same amount in performance fees earned by the fund for four years after the acquisition. This agreement also required the respondents to hire the appellants as per Mr. Braun’s request, and it allowed Mr. Braun to share these entitlement fees with the appellants.

Mr. Braun shared copies of this agreement with the appellants, but they did not have the final signed version. Before they signed their new offers of employment, Mr. Braun told the appellants that he planned to share his entitlement with them. Specifically, he committed to paying them 50% of the management fees and 100% of the performance fees allocated to him. A provision in the appellants’ employment contact also referenced their eligibility for a bonus based on performance and profitability of the hedge fund.

After being fired, the appellants wanted more money in performance fees

The fund did not earn any performance fees in 2012, therefore there were no fees to allocate in 2013. In December 2013, the respondent gave the appellants a discretionary bonus totalling $15,000. The performance fees earned in 2013 equated to over $121,000.00. In January 2014, Mr. Braun directed the respondent to share his 40% of that performance fee with the appellants. Each of the appellants was paid just over $24,000.00, in addition to the discretionary bonus. In July 2014, the respondents abruptly terminated the relationship with the appellants however Mr. Braun remained at the company. Heinsisted that the entire 40% of his performance fees for 2014 be paid out to each appellant (a total of $358,000.00 after tax). Unhappy with this amount provided by Mr. Braun, the appellants claimed the respondent owed them performance fees as well.

At the initial trial, the appellants were unsuccessful on the basis that Mr. Braun had paid them their performance fees for the portion of 2014 which they were employed with the fund. On appeal by the appellants, there were two main issues:

1. The Court of Appeal considered the trial judge’s finding that “the appellants were not entitled to a percentage of the performance fees of the fund as an implied term of their employment agreements.”
2. The court considered “the appellants’ claim that they were entitled to a discretionary bonus under paragraph 5 of their employment agreements.”

The appellants were not entitled to additional performance fee payout from the respondent employer

The Court of Appeal maintained the trial judge’s finding that the appellants were not entitled to a share of the fund’s performance fees as the appellants knew they would be paid performance fees through Mr. Braun, instead of directly from the respondents, when they signed their contract. The written terms of the agreement were clear on plain reading. The record at trial indicated that the appellants were not entirely satisfied with this arrangement and had unsuccessfully tried to renegotiate it numerous times. Ultimately, the appellants signed the employment contract under the understanding that the respondent was not responsible for providing them a share of the performance fees directly. The Court of Appeal found no error in the trial judge’s decision on this issue.

The payout of discretionary bonuses must be fair and reasonable

On the second issue, however, the trial judge did not allow the appellants to argue their case for entitlement to a discretionary bonus under paragraph 5 of the employment agreement they signed. The Court of Appeal found this to be an error. In considering the bonus provision set out in paragraph 5 of the employment agreement, the Court of Appeal found that although the bonus was discretionary, the respondent was not “entirely unconstrained as to how that discretion was exercised.” Implied in any discretionary bonus term is that discretion will be exercised both fairly and reasonably.

The Court of Appeal noted that the only discretionary bonus paid to the appellants in 2014 was the $577.00 which was termed a “2-week pro-rata bonus” for the two-week notice period from July 17 to July 31, 2014. There was no discretionary bonus for the period of January 1 to July 16, 2014. Consequently, the Court of Appeal found this not to be a fair and reasonable exercise of the respondent employer’s discretion. In referring to two employees similarly situated to the appellants, who were paid $200,000.00 as a discretionary bonus, the Court of Appeal held that the appellants should have been paid a discretionary bonus of their own in the same range. The appeal was therefore allowed in part. The Court of Appeal pro-rated the discretionary bonus owed to the appellants for the period of seven months of work, which was equivalent to $115,000, awarded to each appellant.

Contact Baker & Company to Defend the Terms of Your Employment Contract

The employment lawyers at Baker & Company in Toronto regularly work with employees and employers to manage risk and enforce rights with respect to employee contracts and wrongful dismissal matters. Our employment lawyers know how critical it is to ensure that an employer’s obligations to their employees have been satisfied, and also understand the importance in mitigating an employer’s exposure to potential liability and risk claims. To speak with a trusted lawyer about a wrongful dismissal, employment contracts, or other employment law issues, contact us online or call us at 416-777-0100.

You’ve likely heard or signed an employment contract containing a non-competition clause. Some employment contracts include these provisions for the purpose of protecting their business. Employers may find it beneficial to use these clauses when a former employee has put a lot of time into the business, and it would be in their best interests to prevent them from taking clients with them, taking other employees with them, or even opening up shop next door.

Non-compete clauses, thus, come in a variety of forms. Although many of us are familiar with these provisions in employment agreements, they have recently been prohibited in Ontario by the Working for Workers Act, 2021, which came into force in October 2021.

Non-Competition Clauses are No Longer Permitted in Ontario

The Working for Workers Act, 2021 amended Ontario’s Employment Standards Act, 2000 to prohibit employers from providing potential employees with an employment contract containing a non-compete agreement. Non-compete agreements are defined as:

“an agreement, or any part of an agreement, between an employer and an employee that prohibits the employee from engaging in any business, work, occupation, profession, project or other activity that is in competition with the employer’s business after the employment relationship between the employee and the employer ends.”

The amendments came into force as of October 25, 2021. Courts have since ruled that the new amendments prohibiting non-compete clauses do not apply to employment contracts entered into before this date.

What If I Signed My Employment Agreement Before the Law Changed?

In a recent case before the Ontario Court of Appeal, M&P Drug Mart Inc v Norton, the owner of a pharmacy brought an application alleging that their former pharmacist, Norton, had breached the non-competition covenant in the employment agreement. Norton had worked for M&P’s pharmacy, Hometown IDA, since 1980. M&P acquired Hometown IDA in 2014. The new owners wanted to keep Norton on as pharmacy manager, so they negotiated with him to sign a new employment contract.

The contract Norton signed acknowledged the non-competition clause as necessary for the protection of M&P’s business interests. Irrespective of the common law at the time, the non-competition covenant read:

“The Employee agrees that during the Employee’s employment with the Company and during the one year period following the termination of the Employee’s employment with the Company, for any reason whatsoever, the Employee shall not carry on, or be engaged in, concerned with, or interested in, directly or indirectly, any undertaking involving any business the same as, similar to or competitive with the business within a fifteen (15) kilometre radius of the business located at 10 Main Street East, Huntsville, Ontario P1H 2C9.”

In September 2020, Norton resigned from Hometown IDA. He began work as a pharmacist at Campus Trail Pharmacy, which was located less than three kilometres away from his former employer. When M&P reminded Norton of the clause in the contract he signed, he claimed it was unenforceable. The application judge dismissed M&P’s application because the employment clause in question was too ambiguous and overly broad. M&P appealed that decision.

Non-Competition Clauses Must Be Reasonable If They Are Going to be Enforced

Before the Working for Workers Act, 2021 came into force, non-competition clauses were generally unenforceable unless they were reasonable and in the best interest of the public. When looking at the reasonableness of these clauses, courts had to consider two things:

1. whether the employer had a proprietary interest that is entitled to protection; and
2. whether the clause was overly broad with respect to prohibited activities, length of time, or geographical limits.

Where the second consideration was not clear, the clause was considered ambiguous and unenforceable.

Courts Won’t Ignore Unreasonable Possibilities Stemming from Terms of Employment Contract

The Court of Appeal agreed with the decision of the application judge. When an employer wishes to enforce a non-competition clause, also called a “restrictive covenant,” in a contract, it is up to the employer to prove that it is reasonable. The application judge found the clause in question to be ambiguous because M&P failed to demonstrate that the restrictions on Norton after his departure from Hometown IDA were reasonable.

The clause was found to be overly broad because, when the language of the agreement is interpreted closely it appeared to go beyond what was reasonable. For instance, the contract did not expressly prohibit Norton from working as a pharmacist at a pharmacy or in a store that has a pharmacy. Instead, it prohibited him from “carry[ing] on, or be[ing] engaged in, concerned with, or interested in, directly or indirectly, any undertaking involving any business the same as, similar to or competitive with the [Hometown IDA].” The wording of the contract suggests that Norton would be unable to work at a story containing a pharmacy in a non-pharmacist role. It also reads to preclude Norton from being a passive investor in businesses like M&P’s.

M&P was critical of the court’s interpretation of the clause but could not demonstrate that the clause could not be interpreted in this way. In response, the court noted that background facts cannot be used to change the meaning of the words used in the contract or to make a new agreement. In other words: “The language of the covenant is the primary indicator of contractual meaning.”

The Employment Lawyers at Baker & Company Can Help You Draft or Review Your Employment Contracts

Baker & Company regularly works with employers in drafting and reviewing employee workplace policies and manuals. It is vital that these documents be kept up to date to ensure that they comply with all relevant legislation and that an employer’s obligations have been satisfied while also mitigating an employer’s liability and risk. To speak with a lawyer about a workplace policy or an employment law issue contact us online or by phone at 416-777-0100.

The onset of the pandemic caused the work of many to shift to the online space. Although many workplaces are preparing to return to the office, others will remain either fully remote or will be transitioning into a hybrid model.

A concern of many employers when all or a portion of their workforce is clocking in from home is just how much work their employees are doing. To ensure employees are staying on task, some workplaces may use software or other means to monitor employee activity. Recently, Ontario became the first province to pass a law that requires provincially regulated employers to establish an employee policy about disconnecting from work. Embedded in this legislation is a new requirement for employers who monitor their employees who work remotely.

Has Remote Work had a Positive or Negative Effect on Productivity?

Nowadays, it is estimated that up to a quarter of hours spent at work could be performed remotely after the pandemic ends. But with remote work happening in a person’s home, often on personal laptops or computers, a debate has been brewing concerning how work life and private life intersect.

Studies are overall inconclusive on the level of productivity for employees working from home compared to those in the office. Some studies have shown that the longer employees work remotely, their productivity decreases. It is notable, however, that not all drops in productivity are tied to employees being irresponsible when unsupervised. Some employees must take on parenting or caregiver responsibilities when at home. Technology can pose another challenge to productivity that is not directly tied to an employee’s work ethic.

Outside of the office setting, employers have been more interested in opportunities to monitor their employees’ productivity. Employers may consider using tools to monitor keystrokes, geolocation, and eye movements and the like to ensure employees are working on their tasks. Although such technologies are becoming more prevalent in the workforce, bringing it to workers at home has overarching implications when much of work from home is done through the use of personal devices and networks.

Ontario Will Require Its Employers to Create Electronic Monitoring Policies

We previously wrote about the Working for Workers Act, 2022, which was enacted on April 11, 2022. The legislation adds a requirement for provincially regulated employers to the Ontario Employment Standards Act, 2000. Employers must create and provide a copy of a policy on disconnecting from the workplace for all employees. In the Employment Standards Act, “disconnecting from work” means “not engaging in work-related communications, including emails, telephone calls, video calls or sending or reviewing other messages, to be free from the performance of work.”

Additionally, this legislation will also require employers with 25 or more employees to “create and publish an electronic monitoring policy that essentially describes how the electronic monitoring will take place.” Employers need to provide this policy to new, existing, and temporary employees.

Ontario Employers Are Not Being Granted New Rights to Monitor

This move makes Ontario the first province to pass a law of this variety. In addition to establishing transparency measures on employee monitoring, the Bill also establishes a minimum wage for gig workers, like couriers or rideshare workers.

This does not change the law as it relates to what employers can do. Generally, employers have the right to monitor company devices at any time and in any way the employer so chooses. Employers who do this should strive to be transparent and inform their employees. Similarly, employers can monitor social media platforms to ensure that content aligns with company values. Regardless of whether employers choose to exercise their right to monitor, they must also disclose that monitoring is occurring in addition to the purpose and monitoring of the collection of information.

The Federal Government is Considering Similar Legislation

The federal government is planning to introduce similar requirements as Ontario for federally regulated employers. In February, the federal Minister of Labour received a report from the Right to Disconnect Advisory Committee. The report included several points, spanning from establishing a positive work-life balance to the need to protect workers’ privacy and security.

An area of disagreement within the report concerned the creation of a statutory right to disconnect. While union and NGO representatives recommended a legislative requirement to establish a right to disconnect, employer representatives were in opposition. Instead, they recommended that the federal government encourage parties to develop policies to ensure proper work-life balance for employees.

Contact the Employment Lawyers at Baker & Company in Toronto for Assistance with Workplace Policies

The knowledgeable team of employment and corporate lawyers at Baker & Company will continue to monitor when the Working for Workers Act, 2022 comes into force so you can stay informed of your rights and entitlements. We can assist your company in proactively responding to today’s business environment, whether you are a small or large size organization and tailor responsive and strategic legal solutions to meet your company’s individual needs. To speak with a lawyer about employment policies or any other employment law issue, contact us online or by phone at 416-777-0100. 

Bill 88, the Working for Workers Act, 2022, received Royal Assent on April 11, 2022. This law includes several amendments to Ontario’s Employment Standards Act, including the creation of employee electronic monitoring policies, enhanced rights for gig workers, and occupational health and safety protections.

The new employer obligations created by Bill 88 are a continuation of the changes to Ontario’s employment landscape implemented by the passing of the Working for Workers Act, 2021 in late 2021.

Mandatory Electronic Monitoring Policies

Bill 88’s amendments to the Employment Standards Act include the requirement for employers with 25 or more employees to create an electronic monitoring policy. We previously discussed these policies in our blog.

Employers who have or hit the 25 employee threshold by January 1 of each year must have this policy in place by March 1 of the same year. The electronic monitoring policy must address the following:

• whether the employer electronically monitors employees. If it does, the policy must then include:
  • • a description of how and in what circumstances the employer may monitor employees; and
    • the purposes for which information obtained through electronic monitoring may be used by the employer;
• the date the policy was prepared and the date that any changes are made to the policy; and
• any other information that may be prescribed by the Employment Standards Act and its regulations.

Employers that had 25 or more employees as of January 25, 2022, have until October 11, 2022, to comply with this new requirement.

Digital Platform Workers’ Rights Act Enacted

The passage of Bill 88 has created the new Digital Platform Workers’ Rights Act to establish rights for workers who perform digital platform work. This Act is not yet in effect. Instead, it will come into force on a day to be named by the government.

Under the Digital Platform Workers’ Rights Act, “digital platform” work is defined as the provision of paid “ride share, delivery, courier, or other prescribed services, by workers who are offered work assignments by an operator through the use of a digital platform”.

Once in effect, this new legislation provides digital platform workers with the following rights:

• The right to information;
• The right to a recurring pay period and pay day;
• The right to minimum wage;
• The right to amounts earned by the worker and to tips and other gratuities;
• The right to notice of removal from an operator’s digital platform;
• The right to resolve digital platform work-related disputes in Ontario; and
• The right to be free from reprisal.

New Consultant Exemptions Under the Employment Standards Act

Effective January 1, 2023, individuals who meet the qualifications of specific business and information technology (IT) consultants are now exempt from the Employment Standards Act.

Business Consultants

Under the newly-amended Employment Standards Act, a “business consultant” is an individual who provides advice or services to a business or organization in respect of its performance, including:

• operations
• profitability
• management
• structure
• processes
• finances
• accounting
• procurements
• human resources
• environmental impacts
• marketing
• risk management
• compliance
• strategy

Information Technology Consultants

For the purposes of exclusion from the Employment Standards Act (as of January 1, 2023), an “information technology consultant” means an individual who provides advice or services to a business or organization related to its IT systems, including:

• plans
• design
• analysis
• documentation
• configuration
• development
• testing
• installation

Changes to Reservist Leave

The Working for Workers Act, 2022, added new changes to reservist leave under the Employment Standards Act. An employee participating in Canadian Armed Forces military skills training is now entitled to reservist leave. Employees are now entitled to reservist leave after being employed with their employer for three consecutive months.

Amendments to the Occupational Health and Safety Act (OHSA)

In a previous blog, we summarized changes to the Occupational Health and Safety Act (OSHA) concerning the availability of naloxone kits. The Working for Workers Act, 2022 amends the OSHA by requiring employers to provide naloxone kits and comply with related requirements if the employer becomes aware, or ought reasonably to be aware, that there may be a risk of a worker having an opioid overdose at a workplace where that worker performs work for the employer. This change will come into force on a day to be named by the government.

Additional changes include an extended limitation period for prosecuting offences under the OSHA, from one to two years. The maximum fines faced by directors and officers have been raised from $100,000 to $1.5 million and $500,000 for other individuals. A list of aggravating factors will be used to determine the appropriate penalty in each case. Many of these changes come into force on July 1, 2022, although some new provisions regarding the service of OSHA orders and decisions are already in effect as of April 11.

Amendments to the Fair Access to Regulated Professions and Compulsory Trades Act

Bill 88, the Working for Workers Act, 2022, also sets out new changes to the Fair Access to Regulated Professions and Compulsory Trades Act, 2006. These amendments establish timelines within which regulated professions must respond to domestic labour mobility applications unless an exemption is granted to these timelines. These timelines came into effect on April 11, 2022.

Contact the Employment Lawyers at Baker & Company in Toronto for Assistance with Employment Law Issues

The knowledgeable employment lawyers at Baker & Company can help your company ensure it has proper measures to comply with the changes created by the Working for Workers Act, 2022. Our team has extensive experience drafting employment policies that mitigate legal and financial risks for a wide variety of employers. To speak with a lawyer about Bill 88 or any other employment law matter, please call 416-777-0100 or contact us online.

Bill 88, Working for Workers Act, 2022 (“Bill 88”) passed the first reading on February 28, 2022. If passed, it would introduce a number of employment law changes, including amendments to the Ontario Occupational Health and Safety Act (OHSA) as well as require employers to develop a written policy for electronic monitoring.

Proposed Amendments to the Occupational Health and Safety Act

Bill 88 amends OHSA to provide an additional obligation around naloxone kits and increased fines for directors and officers of corporations and other individuals.

Employer to Provide Naloxone Kits in Prescribed Circumstances

The amendments to OHSA will require employers to provide naloxone kits if the employer becomes aware, or ought reasonably to be aware, that there may be a risk of a worker having an opioid overdose at a workplace where that worker performs work for the employer, or where the prescribed circumstances exist. The employer duties set out in section 25 of OHSA will still apply, as appropriate, with respect to the administration of naloxone in the workplace.

The employer will also be required to ensure that, at any time there are workers in the workplace, the naloxone kit is in the charge of a worker who works in the vicinity of the kit and who has received the prescribed training. This training includes training to recognize an opioid overdose, to administer naloxone and to acquaint the worker with any hazards related to the administration of naloxone.

An employer may not disclose any personal information that is reasonably necessary to comply with these requirements.

Increase to Maximum Fines

In addition to the naloxone requirements, OHSA will be amended in respect of fines applicable for convictions under the statute. The maximum fine is increased from $100,000 to $1,500,000 for directors or officers of corporations and to $500,000 for other individuals. A list of aggravating factors to be considered in determining a penalty is also added and the limitation period for instituting a prosecution is extended from one year to two years.

Aggravating Factors

The amendments provide that each of the following circumstances shall be considered an aggravating factor for the purposes of determining a penalty under these new provisions:

1. The offence resulted in the death, serious injury or illness of one or more workers.
2. The defendant committed the offence recklessly.
3. The defendant disregarded an order of an inspector.
4. The defendant was previously convicted of an offence under this or another Act.
5. The defendant has a record of prior non-compliance with this Act or the regulations.
6. The defendant lacks remorse.
7. There is an element of moral blameworthiness to the defendant’s conduct.
8. In committing the offence, the defendant was motivated by a desire to increase revenue or decrease costs.
9. After the commission of the offence, the defendant,
   1. attempted to conceal the commission of the offence from the Ministry or other public authorities, or
   2. failed to co-operate with the Ministry or other public authorities.
10. Any other circumstance that is prescribed as an aggravating factor.

Employers Required to Implement New Written Policy for Electronic Monitoring

Bill 88 would also introduce a new Part X1.1 of the Employment Standards Act, 2000, imposing a requirement on employers that employ 25 or more employees on January 1^st of any year to have a written policy with respect to the electronic monitoring of employees. The policy must be in place before March 1^st of that year.

Required Information

An Employer’s written policy must include:

• Whether the employer monitors the employee electronically and if so:

1. a description of how and in what circumstances the employer may electronically monitor employees, and
2. the purposes for which information obtained through electronic monitoring may be used by the employer.

• The date the policy was prepared and the date any changes were made to the policy.
• Such other information as may be prescribed.

Employers would also be required to retain copies of every written electronic monitoring policy for three years after the policy ceases to be in effect.

Copy of Policy

An employer that is required under this section to have a written policy with respect to electronic monitoring shall provide a copy of the policy to each of the employer’s employees within 30 days from the day the employer is required to have the policy in place or, if an existing policy is changed, within 30 days of the changes being made. With respect to new employees, any employer that is required to have a written policy with respect to electronic monitoring must provide a copy of the policy to a new employee within 30 days of the day the employee becomes an employee of the employer or within 30 days from the day the employer is required to have the policy in place, whichever is later.

“Electronic monitoring” is not currently defined by Bill 88, but a definition may be introduced as the Bill continues through the legislative process. While the amendments specifically provide that nothing in the new provisions affects or limits an employer’s ability to use any of the information obtained through electronic monitoring, employers must still comply with all relevant privacy legislation when monitoring employees electronically.

Coming Into Force

If accepted into law, Bill 88 would come into force on the day it receives Royal Assent.

Contact the Employment Lawyers at Baker & Company in Toronto for Assistance with Employee Policies

The skilled employment lawyers at Baker & Company will continue to monitor the Bill as it proceeds through the House and will update if and when it receives Royal Assent and advise as to how the Bill may impact an employer’s obligations. Our team has extensive experience advising employers with respect to workplace health and safety issues and employer obligations.

We regularly draft new policies, review and update existing policies, and ensure all relevant manuals comply with relevant legislation. We protect our clients’ interests, help shield them from liability, and ensure they meet their legal obligations. To speak with a lawyer, contact us online or by phone at 416-777-0100.

Employment and Social Development Canada (the “ESDC”) recently updated their guidelines for issuing Records of Employment (“ROE”) to assist employers in issuing ROEs for employees during the COVID-19 pandemic. These changes address employees who have quit or have been terminated for failing to comply with an employer’s vaccination policy in the workforce.

Before discussing these new changes, we will briefly review an employer’s obligation to provide an ROE.

What is a Record of Employment or ROE?

An ROE is an ESDC document that provides information on an individual’s employment history with an organization including insurable earnings and insurable hours. The ESDC uses the information on the ROE to determine whether someone is eligible for Employment Insurance Benefits. Employers are required to issue an ROE whenever someone stops working. The ROE must be issued within five calendar days after the employee experiences an interruption of earnings, regardless of the reason why the employee stopped working (i.e., termination, resignation, layoff).

ROEs may be submitted electronically or in paper form.

Electronic ROEs

An ROE may be submitted electronically three ways through:

• ROE Web by using compatible payroll software to upload ROEs from your payroll system
• ROE Web by manually entering data online through Service Canada’s website
• Secure Automated Transfer (SAT), which is performed on your behalf by a payroll service provider using bulk transfer technology.

The ESDC has developed temporary simplified measures to help employers complete the ROE Web registration process to submit ROEs electronically. Employers and primary officers who can’t authenticate and validate their identity through their CRA account or in person at a Service Canada Centre can temporarily validate their identity online to complete the registration process.

Paper ROEs

A paper ROE is a one-page form completed in triplicate, with the first being the original and the second and third being carbon copies. The forms must be distributed as follows:

• Part 1 is given to the employee who will use the copy to apply for Employment Insurance Benefits
• Part 2 (the blue copy) is given to Service Canada
• Part 3 is kept for the employer’s records

The New Guideline Changes

Block 16 – Reason for Issuing an ROE

Block 16 of the ROE indicates the reason for the employee’s leave or separation from employment or the reason why the ROE is being issued.

Pursuant to the new guidelines, when the employee is no longer working because the business has decreased operations or closed due to COVID-19, employers should use code A (shortage of work). 

When the employee is sick or quarantined, employers should use code D (illness or injury).

The guidelines specifically indicate not to “add comments unless absolutely necessary.”

COVID-19 Vaccination

Many employers have introduced vaccine mandates into their workforce pursuant to legislative or other requirements. The ESDC has changed the codes to be entered on ROEs where employees refuse to comply with such vaccine mandates, as follows:

When the employee doesn’t report to work because they refuse to comply with an employer’s mandatory COVID-19 vaccination policy, employers should use code E (quit) or code N (leave of absence). 

When an employer suspends or terminates an employee for not complying with their mandatory COVID-19 vaccination policy, employers should use code M (dismissal or suspension). 

The ESDC may contact employers to determine:

• if the employer adopted and clearly communicated to all employees a mandatory COVID-19 vaccination policy
• if the employees were informed that failure to comply with the policy would result in loss of employment
• if the application of the policy to the employee was reasonable within the workplace context
• if there were any exemptions for refusing to comply with the policy

This is a significant change as employees who quit, took a leave of absence, or were dismissed for failing to comply with an employer’s vaccine mandate may now potentially be disqualified from receiving Employment Insurance Benefits, even though the employee has been paying into the Employment Insurance Benefits fund. Employees are typically only disqualified from receiving Employment Insurance Benefits when they have quit their job or there was just cause to terminate their employment, a high threshold that can often be difficult for employers to meet.

It remains to be seen how these guideline changes may be viewed through a human rights law lens, however, the Ontario Human Rights Tribunal has already ruled in favour of vaccine mandates in the workforce.

Canada Emergency Wage Subsidy

If an employer is paying employees with the Canada Emergency Wage Subsidy (CEWS), ROEs are only issued for those who have an interruption of earnings when the CEWS ends.

If an employee is still off work when their CEWS ends, they can apply for Employment Insurance Benefits. If they do, ESDC will use their ROEs to determine if they qualify for Employment Insurance Benefits. It is important that the ROE accurately reports all earnings, including the CEWS, and all hours worked.

Employees who are in insurable employment before receiving CEWS continue to be in insurable employment once in receipt of the CEWS, if that is the only thing that has changed. The guidelines state that this remains true even if the employee is not working while receiving the CEWS.

Contact the Employment Lawyers at Baker & Company in Toronto for Assistance with Records of Employment

At Baker & Company, our exceptional team of employment lawyers provides advice to both employers and employees at all stages of the employment relationship. We regularly advise clients on issues relating to employee policies, severance packages, and wrongful dismissal. If you have questions about termination, resignation, terminating an employee, or issuing or receiving an ROE we are here to help. To speak with a lawyer, contact us online or by phone at 416-777-0100.