Canadian courts have seen a vast array of employment law cases in 2022. We have identified 10 of the most important employment law cases from the past year. Many of these decisions set new precedents or otherwise clarify areas of the law that have caused uncertainty. With the implementation of the Working for Workers Act, 2021 and the rollback of many COVID-19 related benefits, the employment law landscape is sure to continue developing in the upcoming New Year.
Many of the selected cases have gone to the Court of Appeal, providing further clarity to legal matters that continue to arise due to the ever-changing workplace.
Validity of Contractual Terms
Many employment law disputes turn on the enforceability of the employment contract. For example, does the contract limit a dismissed employee’s severance to the minimum prescribed by the Ontario Employment Standards Act, 2000, c. 41 (“ESA”), or does ambiguity within the contract entitle dismissed employees to common law reasonable notice?
The employment contract in Rahman contained an illegal termination provision that contravened the ESA. At trial, the termination provision was found nevertheless valid because the employee received independent legal advice, there was no apparent bargaining power imbalance, and the employee negotiated her termination provision. The employee, as a sophisticated person, surely intended for the provision to be legally enforceable.
The Ontario Court of Appeal disagreed. It is the wording of the termination provision alone which determines whether it contravenes the ESA. If the plain wording of the termination provision is contrary to the ESA, the provision will be void and unenforceable. The parties’ sophistication, access to legal advice, or subjective mutual intention to not contravene the ESA is irrelevant. In Ontario, no action of either party can make an illegal termination provision enforceable.
This issue was also discussed last year, in our Most Important Employment Law Cases Ontario 2021.
The employment contract in Irwin contained an arbitration clause which the dismissed employee argued was invalid due to unconscionability and inconsistencies with the ESA. The Ontario Court of Appeal upheld the motion judge’s finding that the validity of the arbitration clause was itself a matter to be decided at arbitration.
It is not uncommon for an employment contract to contain a “non-compete clause” seeking to prevent dismissed employees from working with a competitor of their former employer. However, thanks to the Working for Workers Act, 2021 (the “Act”), non-competition clauses became unenforceable, unless the employee is an “executive” or it is for the sale of a business.
The non-compete clause in M & P Drug Mart pre-dated the implementation of the Act. The Court of Appeal confirmed the Act did not apply retroactively. Only non-compete clauses put in place after the Act received royal assent were automatically invalidated. This confirms the holding of an earlier Ontario Superior Court decision this year (see: Parekh et al v. Schecter et al, 2022 ONSC 302).
The Court instead determined the enforceability of the clause based on common law, rather than statute. The Court confirmed the onus was on the employer to demonstrate the clause was a “demonstrably reasonable restriction of activity” and not ambiguous or overly broad. The Court found the clause here was indeed ambiguous and overly broad, and thus unenforceable.
Common Law Reasonable Notice Periods
In Pavlov, the Ontario Court of Appeal upheld a 10-month notice period for a 47-year-old employee with only 3 years of service. In awarding 10 months’ notice, the trial judge considered the employee’s inducement, their senior position, and the timing of the termination: May 2020, a time where the entire country was only just beginning to understand the effects of COVID-19. The court determined that termination during COVID-19 would negatively impact the employee’s job search.
Currie is one of the rare cases in employment law where a notice period above the ordinary “cap” of 24 months was awarded. Here, the Ontario Court of Appeal upheld a 26-month notice period. The dismissed employee was 58 years old with 40 years of service.
The Court upheld the award of 26 months because:
- She dropped out of high school and worked for the employer since she was 18 years old;
- At the time of dismissal, she was 58 years old and nearing the end of her career;
- She worked in a specialized field, making re-employment more difficult;
- Her work experience was limited to one employer and the workforce had changed significantly since she started working; and
- Her termination was “equivalent to a forced retirement” due to her limited education, skills, and age.
“Just Cause” vs ESA
In Render, an employee slapped the buttocks of a female colleague in what he alleged to be an accident. After making remarks to his colleagues about the incident, the female colleague reported the incident and the employee was terminated soon after for just cause.
The Ontario Court of Appeal confirmed that “just cause” at common law is not the same as “wilful misconduct” under the ESA. Not everything that amounts to “just cause” will also amount to “wilful misconduct” under the ESA. Therefore, where a termination “for cause” occurs, a dismissed employee may still be owed their ESA entitlements if the misconduct does not rise to the level of “wilful misconduct”.
There is little case law to date clarifying how amendments to the Class Proceedings Act, 1992 in 2020 will apply. One of the most significant amendments related to the application of the preferable procedure criterion at the certification stage.
In Curtis, the application of the preferable procedure criterion was of central importance, albeit under the both scheme of the Class Proceedings Act.
The class proceeding in Medcan was initially denied certification due to a failure to satisfy the preferable procedure criterion. This was appealed to the Ontario Divisional Court, where it was determined the certification judge did not apply all the necessary questions in the preferable procedure test.
The Divisional Court then confirmed that class actions are the preferable procedure where employers have uniformly failed to comply with their statutory obligations, including regarding unpaid vacation and public holiday pay.
The Continuing Impact of COVID-19
During the pandemic, workplaces were forced to change because of shifting economic and health conditions. The government implemented financial support programs to offset the impact on employers and employees, such as the Infectious Disease Emergency Leave (“IDEL”) and the Canada Emergency Response Benefit (“CERB”). These new government policies have altered employment law and the case law that followed.
The dismissed employee was employed by Tim Hortons when she was laid off without pay during the pandemic due to reduced staffing. The employee argued her layoff amounted to a constructive dismissal. Her claim was dismissed at trial, but she appealed to the Ontario Court of Appeal.
Here, the Court had an opportunity to clarify a point of uncertainty in the law: Did COVID-19-related layoffs amount to constructive dismissals at common law? Unfortunately, the Court did not answer this important question. Instead, the Court set aside the motion judge’s order on other unrelated grounds, effectively dodging the question, much to the dismay of Ontario employment lawyers.
In Yates, the British Columbia Court of Appeal answered once and for all the question of whether CERB payments should be deducted from wrongful dismissal damages. This had been a point of great contention in the jurisprudence across the country.
The Court determined that CERB should not be deducted from wrongful dismissal damages. Employers in breach of their employment contracts should not benefit from an income support program that was implemented to support workers during the pandemic. Whether CERB payments would ultimately have to be repaid by the employee was of no concern to employers. Thus, the court concluded that CERB payments should not be deducted from wrongful dismissal damages.
Canada Labour Code: Reinstatement or Pay in Lieu
In Hussey, the dismissed employee was terminated for cause. She then filed a complaint of unjust dismissal under the Canada Labour Code. At adjudication, it was held the employer did not have cause to dismiss the employee because she had not been progressively disciplined. The employee therefore had been unjustly dismissed.
The adjudicator’s decision was upheld at the Federal Court of Appeal. The Court further confirmed that although the “default” remedy for unjust dismissal is reinstatement, an adjudicator can instead order compensation in lieu of reinstatement where reinstatement is not appropriate.
Monkhouse Law is an employment law firm located in Toronto focusing on workers’ issues. At Monkhouse Law, you will receive legal advice from a trained professional who will assist with your matter every step of the way. Give us a call at 416-907-9249 or fill out this quick form. We offer a free 30-minute phone consultation.