Welcome to WISE LAW’s Introduction to Ontario Employment Law, our primer on the legal framework that applies to wrongful dismissal, discrimination, harassment and other employment-related issues in Ontario workplaces.
This article will provide you with an overview of the following topics:
- Wrongful dismissal
- Constructive dismissal
- How to respond to a proposed severance package
- Unwarranted warnings, progressive discipline or performance improvement plans
- Workplace bullying and harassment
- Sexual harassment and gender-based discrimination
- Racism, age discrimination and other human rights violations in the workplace
- The fairness and enforceability of employment contracts
- Other workplace agreements such as non-competition and non-solicitation agreements
This article applies only to non-unionized workplaces. In unionized environments, collective agreements provide for employees’ responsibilities, protections and remedies, and employee concerns must be addressed through their unions and the grievance processes in place.
The general information on this website is not a substitute for legal advice. Every employee’s specific circumstances are unique. You should consult a lawyer immediately for legal advice where your employment has been terminated or where you believe your job may in be jeopardy.
If you have been wrongfully dismissed or have a serious concern regarding your employment, the Toronto employment lawyers at WISE LAW will be glad to assist. We may be consulted by telephone at (416) 972-1800 or by email without fee or obligation.
Are you seeing signs that something is not right at your workplace?
Each of these circumstances may foreshadow problems ahead.
While there is no way of knowing exactly what the future will bring, it is possible to arm yourself with basic knowledge of your rights and entitlements, long before your concerns may regrettably be proven justified.
We hope that this article will be of assistance if you are having problems in your workplace.
We also stress the importance of obtaining qualified legal advice early. If a serious workplace problem appears to be looming, consult with a qualified Toronto Employment Lawyer. With legal advice and guidance, you can ensure you protect yourself most advantageously as your workplace issues develop.
Two separate streams of Ontario employment law govern the province’s employer and employee relationships. These are the legislative stream and the common law.
In terms of legislation, Ontario’s Employment Standards Act (ESA) sets out minimum standards that must be met in Ontario workplaces, with provision for everything from minimum wage, vacation and overtime pay to the availability of family-related leaves and other leaves of absence.
The Act also provides for the minimum entitlements of employees who are terminated without cause. The ESA is administered by the Ministry of Labour, through its Employment Standards Program, which investigates and adjudicates workplace complaints and enforces compliance with the Act.
The maximum compensation that is available upon termination of employment under the ESA is 34 weeks ordinary salary. This 34 weeks is comprised of:
- One week’s compensation per year of service, as notice or termination pay, up to a maximum of eight weeks, plus
- One additional week’s compensation per year of service, up to a maximum of 26 weeks, as severance pay. To be eligible for severance pay, an employee must have at least five years of service for an employer with payroll in excess of $2.5 million dollars per year.
Ontario common law provides for significant, additional financial entitlements for employees who have been terminated without cause, or otherwise wrongfully dismissed. These additional common law entitlements will typically greatly exceed the minimum termination and severance provisions of the ESA.
The entitlements of wrongfully dismissed employees are determined by the courts on a case-by-case basis. The typical range of compensation awarded to successful Plaintiffs can approach up to one month’s pay for each year of service (or more), to an approximate maximum of 24 months. Wrongfully dismissed, very-long service employees have only very occasionally been awarded more than 24 months’ pay in lieu of notice by Ontario courts.
Many Ontario employers mistakenly believe their obligations upon termination are capped at the ESA minimums, and are genuinely surprised to learn otherwise. Employers and employees alike are encouraged to obtain legal advice from a qualified employment lawyer whenever a termination of employment is contemplated or has occurred, so that they can be informed about their respective rights, entitlements and obligations and carefully assess the best way forward.
Termination of your employment, with or without cause, can be highly unsettling.
Along with the financial upheaval and hardship that often flows from the loss of a job, an improper or wrongful termination of employment may result in serious personal disruption, uncertainty, anxiety and emotional distress.
Subject to certain statutory legal exceptions that are discussed below, Ontario employers generally do have the right to hire and fire employees as they see fit.
Most terminations of employment in Ontario occur “without cause.” That means the employer has ended the employment even though there are no grounds or justification at law entitling termination for cause. Where an employer wishes to terminate employment, and no just cause or grounds exist for doing so, an employer is required to give reasonable notice of termination to an employee.
That means the employer must notify the employee, reasonably in advance of the termination, or alternatively, where reasonable notice or working notice is not given, an employer is required to provide reasonable compensation to the terminated employee, in lieu of notice.
The compensation an employer is required to pay is based on the salary, benefits and bonuses the employee would have received during the period of reasonable notice that the employee ought to have received from the employer prior to termination. Where an employer fails to provide such compensation or seeks to provide inadequate compensation, an employee’s legal rights may be enforced by proceeding with a claim for compensation for wrongful dismissal.
Ontario employment law protects employees from wrongful dismissal and unjust dismissal by employers. Ontario’s courts and employment law tribunals seek to balance the difference in power between employer and employee by ensuring that employees’ basic rights are observed and that appropriate remedies and compensation are available to wrongfully dismissed employees.
Legal advice from a qualified Ontario employment lawyer is strongly recommended to assist in determining your rights and entitlements.
What is “reasonable notice?” How is it calculated?
Under Ontario employment law, the determination of an employee’s reasonable notice entitlement will depend on many factors, including:
Reasonable Notice in Ontario: The Bardol Factors
The “classic” statement of factors to be considered in determining reasonable notice was made by Mr. Justice McRuer in the 1963 case of Bardal v. Globe and Mail Ltd:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualification of the servant.
These criteria, and the many others that are typically considered by Ontario’s courts in assessing the notice entitlements of wrongfully dismissed employees, have come to be known as the Bardol factors.
There is no “rule of thumb” under Ontario employment law as to the calculation of notice entitlements upon a wrongful dismissal. Typically, an experienced, senior manager may be entitled notice up to the range of one month of notice for each year of service. An entry-level, junior employee’s entitlement may be somewhat reduced.
Short-term employees may be entitled to extended notice
In some cases, however, a short-term employment that ends preemptively may give rise to a considerable notice period that may even exceed the duration of the actual employment. Numerous cases decided by Ontario courts have awarded short-term employees, especially executive and managerial-level employees, extended notice periods of six months or more, even after only a few months of employment.
Extended Notice where there Inducement to leave stable, prior employment
Inducement is another factor considered by the courts in determining the reasonable notice period for a wrongfully dismissed employee.
An employee who is terminated without cause from a relatively new position after being induced to leave an earlier, stable position may be entitled to an extended notice period under Ontario employment law. Where there has been such inducement, Ontario employment law provides that notice entitlement may include consideration of all the employee’s years of service in the previous position. As noticed by the Supreme Court of Canada:
… such inducements are properly included among the considerations which tend to lengthen the amount of notice required…. there is a need to safeguard the employee’s reliance and expectation interests in inducement situations. I note, however, that not all inducements carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.
Mr. Justice Iacobucci, Supreme Court of Canada, Wallace v. United Grain Growers Limited
For an inducement to affect the applicable period of reasonable notice, it must exceed the ordinary level of persuasion utilized by a typical, recruiting employer, and rise beyond the level of encouragement inherent in any ordinary hiring process. A notice period may be increased where specific promises, beyond the ordinary, have been made by an employer or recruiter as to future career advancement, expected increases in responsibility, long-term job security and or higher compensation with the new organization, particularly if employment is terminated after a short period of time. The representations of “headhunters” or professional recruiters on behalf of prospective employers may also be considered in determining whether inducement has been a factor.
In considering the notice period applicable, a court will enquire as to whether there was any inducement, what degree of inducement was exercised, and the degree to which the inducement influenced the employee’s decision to leave the prior employment position.
Where the employee has been actively looking for a new position, however, inducement may become a less compelling factor. In McCulloch v. IPlatform Inc., the Ontario Superior Court held that no inducement had occurred, even where employment was terminated after only four months, due to restructuring. The Court held that the employee had pursued a new position for significantly greater pay in the absence of specific promises from the employer regarding future prospects. Mr. Justice Echlin referred to the employee as a “willing seductee” and declined to extend the notice period on the basis of inducement.
Rather than immediate termination, an employer may provide “working notice.” In that case, notice is provided to an employee that employment will terminate on a fixed date in the future.
Under Ontario employment law, whether a “working notice” period is of deemed to be of reasonable duration will depend on a number of factors, including the employee’s length of service, age, education, the position held, seniority, and the likelihood of obtaining similar employment in the future. If the duration of “working notice” was inadequate, a wrongful dismissal claim may still be brought with respect to the additional period of notice that was reasonably required, but not provided.
During a working notice period, both employer and employee are required to maintain the status quo in the workplace. Job descriptions, duties and compensation must be maintained. Workplace terms and conditions cannot unreasonably be altered, and job performance and conduct must meet reasonable requirements and expectations. Any adverse change during a working notice period could lead to a termination by the employer or an allegation of constructive dismissal by an employee.
Working notice can create challenges in the workplace, particularly if it extends over a long term. Legal advice from a qualified Ontario employment lawyer is strongly recommended to assist in determining your rights, obligations and entitlements, where a period of working notice is provided.
In very limited circumstances, employment may properly be terminated for cause without any prior notice to the employee. In such cases, the terminated employee has no claim to compensation or severance.
It is very difficult under Ontario employment law for employers to prove “just cause” for termination of employment.
Generally, where an employer has concerns based on an employee’s performance or even misconduct, the employer must warn or advise the employee of the specific concerns requiring attention, and the employer must further grant reasonable opportunity to the employee to remedy and improve performance or conduct in the areas of concern.
If no improvement or change is demonstrated after a prolonged period and the presentation of repeated warnings, usually in written form, an employer may consider whether grounds present for termination of employment with cause.
As well, in rare circumstances of gross misconduct, grounds may also present for immediate termination with cause. Examples of such circumstances could include theft or fraud, grossly unsafe workplace practices, blatant and gross negligence, serious and intentional dereliction of employment duties, or fundamental breach of specific, critical term of an employment contract.
An employer may also, in some circumstances, have lawful grounds to take reasonable disciplinary steps, such as short suspensions to redress employee misconduct.
In short, in most cases, it is difficult for Ontario employers to establish just cause for termination in a court proceeding, unless written warnings have been provided and adequate opportunity for improvement has been provided. In most cases, reasonable notice is required.
The entitlement of employers to terminate employment without cause has limitations under Ontario employment law. Several Ontario statutes prohibit termination of employment under certain, specific circumstances. For example:
- Under Ontario’s Employment Standards Act, an employee cannot be penalized in any way for taking or planning to take a pregnancy or parental leave. Upon the conclusion of such leave, an employee is entitled to return to the same job he or she had before the leave began or a comparable alternative position, if the employee’s previous job has genuinely been eliminated.
- Employers must always comply with the Ontario Human Rights Code, which prohibits discrimination in hiring and firing (and in workplaces generally) due to race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability. If a termination is discriminatory, it is unlawful.
- As well, under the Workplace Safety and Insurance Act, in certain circumstances, an employer cannot legally terminate an employee who is or has been off work due to a workplace injury or disability. According to the Act, employers who regularly hire 20 or more workers must re-employ injured workers, if they have been employed for at least one year before the injury occurred and are functionally able to perform the essential duties of the pre-injury position or other, suitable work. This right to re-employment lasts for two years following the date of the workplace injury or one year after the employee is medically certified as ready to return, or until the employee reaches age 65.
- Every Ontario employer is also prohibited under the Occupational Health and Safety Act from disciplining or terminating an employee as a reprisal due to a safety or harassment complaint. Under the Act, employers may not dismiss or threaten to dismiss a worker, discipline or suspend or threaten to discipline or suspend a worker, impose any penalty upon a worker, or intimidate or coerce a worker, because the worker has acted in compliance with or has sought the enforcement of the Act.
These statutory restrictions on dismissal may be strictly enforced in Ontario’s courts and tribunals.
If your employment has been or may be terminated improperly in any of these circumstances, seek legal advice and representation to protect your interests, and to secure the legal remedies and compensation that you may be entitled to.
It is lawful, in extreme and difficult situations, for an employee to claim that an employment position has effectively come to an end, even where there has been no actual termination.
In such cases, an employee has been constructively dismissed, and may be entitled to resign while still maintaining all entitlements to severance-related compensation from the employer.
Under Ontario employment law, a constructive dismissal may occur where a unilateral and fundamental change is imposed by the employer on the duties or responsibilities of the employment, including the removal of important responsibilities and functions so that the employee has effectively been demoted to a lesser position. Such constructive dismissal may occur even in the absence of a reduction in salary, compensation or benefits.
Constructive dismissal may also occur where continuation of the employment has reasonably become untenable to the employee due to persistent and serious harassment, workplace bullying or discrimination, a major change in working conditions, location of employment or terms of employment, or a unilateral, significant reduction without reasonable notice in the terms of compensation paid to the employee.
In such circumstances, an employee may have the right to treat the job as terminated, even where the employer has no specific intention to terminate or end the employment.
An employee who has been constructively dismissed has the same entitlements to salary in lieu of notice, statutory severance and termination payment, and such additional compensation which would have been available had he or she been dismissed without cause.
Retaining a wrongful dismissal lawyer and acquiring legal advice is essential prior to alleging constructive dismissal in any specific case.
A claim of constructive dismissal is not without risk and should be made only after thorough consideration of the circumstances with a qualified Toronto employment lawyer.
Compensation and other remedies are available in Ontario to wrongfully dismissal and unjustly terminated employees.
Under Ontario employment law a wrongfully dismissed employee may claim pay in lieu of reasonable notice, if he or she has been terminated from an employment position without just cause or reasonable notice. Claims for these Ontario common law entitlements are typically made in wrongful dismissal proceedings.
As well, The Ontario Employment Standards Act is the key Ontario employment statute that sets out the minimum termination pay and severance pay an employer is required to provide, if an employee is dismissed without cause and in the absence of willful misconduct.
Damages and other compensation for wage losses may also be awarded under the Ontario Human Rights Code, for loss or injury caused due to discrimination by the employer or another person at the workplace in contravention of the Code. Under the Code, reinstatement of employment may also be ordered.
Finally, those employed in industries governed by federal legislation, including banking and interprovincial transport, may also have additional entitlements and remedies under the Canada Labour Code, which provides for compensation and reinstatement where an employee has been unjustly dismissed.
Upon termination of employment without cause, an employer must, at a minimum, provide any statutory termination pay and severance pay to the employee which are required under Employment Standards legislation. These statutory payments must be made in a lump sum, unless you reach agreement with your employer to permit periodic salary continuance payments over the statutory period.
An employer must also deliver an accurate Record of Employment (R.O.E.) to the employee within five (5) days of termination. This documentation is generally needed to initiate an application for employment insurance.
Upon termination of employment, an employee may receive a “severance package” or proposal from an employer to pay additional compensation in lieu of notice. Usually, an employer will require that a release is signed by the employee prior to payment of any further compensation.
Often, very short time-periods or deadlines are given for the employee to consider the employer’s proposal. Legal advice is critical, where any such proposal has been advanced by the employer, and it is essential prior to the execution of a release by the employee.
In many circumstances, significant additional compensation, over and above to amounts initially proposed by employers, can be obtained through engaging qualified Ontario employment law counsel to conduct negotiations aimed at improving severance proposals,
Compensation in Ontario wrongful dismissal claims is determined with regard to the reasonable notice the employee was entitled to receive, but did not receive, upon termination. Depending on circumstances, in wrongful dismissal claims, damages are often calculated under Ontario employment law in the range of up to one month’s salary and benefits, in lieu of notice, for every year of an employee’s service, together with additional compensation for job-search expenses. In certain circumstances, reasonable notice can well exceed this.
It is unusual for more than two years’ notice to be granted by Ontario courts, irrespective of the duration of employment, except in the most compelling of circumstances. However, there are rare cases, typically involving employees with very long tenure of employment, where compensation in excess of two years’ salary has been awarded.
At WISE LAW, we always pursue comprehensive compensation for our clients in wrongful dismissal and related employment law claims, including the following:
Ontario employment agreements often attempt to limit the amount of notice, or pay in lieu of notice, to be provided to dismissed employees upon termination of employment.
Typically, such employment contracts are drafted by employers, and attempt to limit departing employees to only the statutory minimum notice period and severance payments required under the Employment Standards Act.
They don’t always succeed in doing so.
Upon a termination, it is necessary to determine at the outset whether any such employment agreement is applicable, and if it will be enforceable under Ontario employment law.
Employment agreements are not always legally enforceable. This is particularly the case with respect to employment agreements that fail to strictly comply with the minimum requirements of the Ontario Employment Standards Act.
Courts may also refuse to enforce agreements that are vague or unclear, or employment agreements which are entered into after employment has already commenced, upon the employer’s insistence.
Employment agreements that purport to limit severance entitlements may also be challenged following termination on the basis of unconscionability, or because they have become outdated due to position changes or promotions subsequent to the agreement.
Where an employment agreement includes any provision that purports to limit the employee’s notice or severance entitlements upon termination, it is essential to obtain immediate advice from a qualified wrongful dismissal lawyer.
Ontario Courts may award additional moral damages to employees who have been wrongfully dismissed, where the employer conducted the termination in bad faith or dishonestly, in a manner that caused public embarrassment, or was otherwise callous, shocking, or in blatant disregard of the employee’s dignity and well-being.
Such damages are generally available under Ontario employment law only where the terminated employee experiences significant, medically documented harm or injury as a result of the employer’s misconduct, such as depression, anxiety or other serious medical issues. It is important that former employees who are experiencing such harms attend with their pysicians to seek appropriate treatment and to ensure that their medical records include documentation of the difficulties and symptoms presenting.
Under Ontario employment law, a terminated employee is required to make reasonable and diligent effort to secure re-employment after a dismissal. In wrongful dismissal actions, damages may be reduced if such efforts are not proven. The is duty to seek re-employment relates to the employee’s duty to mitigate damages.
The employer’s liability to pay damages for wrongful dismissal during a notice period is reduced by any income the employee receives (or ought to have received) during the notice period.
The duty to seek re-employment may be further complicated if an employment contract has been signed which contains a restrictive covenant such as a non-competition agreement or non-solicitation agreement.
The enforceability of such agreements is often questionable, and legal advice is required from a qualified Toronto employment lawyer as to the effect, if any, of such provisions.
If a terminated employee does not seek a new position, a Court can impute income to the employee, based on the amount the Court believes the employee would have earned, had a reasonable job search been undertaken. A Court may on that basis reduce or limit the notice monies payable by the employer.
Reasonable re-employment options are not limited to job-search. In certain circumstances, returning to school or starting a new business have been held to be reasonable mitigation, as well. The test is whether reasonable, consistent and active ongoing steps have been taken to move toward a return to the workforce on a reasonable basis.
As a result, in wrongful dismissal cases, Plaintiffs are almost always required to show comprehensive evidence of their job search activity.
It is accordingly essential that complete records be maintained of all job-search activity following dismissal.
WISE LAW Recommends that you Maintain a Comprehensive Record of Your Job-Search:
Wrongful dismissal claims are pursued by way of negotiation and through Ontario’s court system. An employee’s entitlement to damages for wrongful dismissal may greatly exceed the minimum benefits payable under the Employment Standards Act.
NOTE: If you have been dismissed, it is strongly advised that you seek legal advice regarding your entitlements prior to filing a claim under Ontario’s Employment Standards Act.
You cannot start a court action against your employer for wrongful dismissal if you have already filed an Employment Standards Claim with the Ministry for the same termination, unless your claim is withdrawn within two weeks of filing it.
Under the Act, these statutory minimum termination benefits are must be provided upon a termination without notice or cause:
|Length of Employment||Notice period or Termination pay|
|Less than 3 months:||0|
|3 months, but under 1 year:||1 week|
|1 year, but under 3 years:||2 weeks|
|3 years, but under 4 years:||3 weeks|
|4 years, but under 5 years:||4 weeks|
|5 years, but under 6 years:||5 weeks|
|6 years, but under 7 years:||6 weeks|
|7 years, but under 8 years:||7 weeks|
|8 years or more:||8 weeks|
In addition to statutory notice requirements, and the requirement of payment of salary in lieu of notice, Ontario employees in certain circumstances may be entitled to payment of Severance Pay, under the Act.
Under Ontario employment law, severance pay must be provided to an employee who:
Statutory severance pay in these circumstances is approximately one further week of ordinary per year of service. The maximum severance entitlement under the Act is an amount equal to the employee’s regular wages for a regular work week for a period up to 26 weeks.
The statutory severance benefit is calculated specifically by multiplying the employee’s regular wages (excluding overtime) for a regular work week by the sum of:
Severance pay must be paid as a lump sum within seven days after termination of employment or on the next regular pay day, whichever is later, unless the employee agrees to a longer-term payment schedule.
Entitlements under common law for damages for wrongful dismissal may dramatically exceed the minimum statutory entitlements described in this section. We recommend that legal advice be obtained whenever a severance proposal is provided by an employer.
The Act regulates and enforces many aspects of workplace law, including vacation and overtime pay, pregnancy, family and parental lave, Public Holiday entitlements and payroll issues.
The Employment Standards Information Centre may be reached at 416-326-7160 or toll- free at 1-800-531-5551, for further information.
The Ontario Human Rights Code provides as follows:
5. (1) Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, same-sex partnership status, family status or disability.
Harassment in employment
(2) Every person who is an employee has a right to freedom from harassment in the workplace by the employer or agent of the employer or by another employee because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, age, record of offences, marital status, same-sex partnership status, family status or disability.
The Code also provides for a process of dispute resolution and hearing by Tribunal in circumstances where discrimination is alleged to have occurred, in workplaces and elsewhere.
The Tribunal is empowered to make mandatory orders to require compliance with the Act. Orders may be made for reinstatement of employment where an employee has been terminated in contravention of the Code.
Monetary compensation may include an award for damages for injury to your dignity, feelings and self-respect as a result of the discrimination.
As well, the Tribunal may also make an Order requiring restitution, including monetary compensation, for wage losses and other economic loss arising out of Code infringement.
Ontario Human Rights Code complaints generally must be commenced within one year of the offending actions.
The general information in this article about Ontario employment law is not applicable to any specific case, and is intended for information purposes only. It is not a substitute for legal advice and may not be relied on as such. Readers are expressly advised to consult with a qualified Toronto Employment Lawyer or Wrongful Dismissal lawyer for advice regarding their specific circumstances and entitlements under Ontario employment law.
© Garry J. Wise and Wise Law Office, Toronto, Ontario, Canada. This information may not be reproduced without consent in writing.