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What is a Sufficient Amount of Time for Obtaining Independent Legal Advice?

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Most contracts are written in dated legalese that even the most seasoned lawyer can struggle to comprehend. Where one party to an agreement is less sophisticated and holds less power, and the other party (that likely drafted the contract) yields more power, courts will look to confirm that the less sophisticated party understood the agreement they were signing off on.  Courts are especially vigilant to circumstances where the lesser party bore an amount of risk that was significantly higher than the benefit they gained. A good example is a loan guarantee. A guarantor may not understand the document, and may…

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Will the Supreme Court of Canada Clarify What Language Is Required to Exclude Bonus and Incentive Plan Entitlements from Termination Pay?

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When an employee is terminated without cause, he or she is generally entitled to reasonable notice or pay in lieu thereof. The employer is required to pay the employee all of the regular compensation that he or she would have received during the notice period. Regular compensation means more than base salary – it includes benefits such as non-discretionary bonuses and stock option plan entitlements. Many employers attempt to limit entitlements to such benefits by including clauses in incentive and bonus agreements that require “active employment” for the agreement to remain in effect, or that extinguish benefits upon an employee’s…

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Whose Burden Is It? The Yo-Yoing Responsibility of Proving Whether Someone Is an Employee or an Independent Contractor

By Uncategorized

Whether you are classified as an employee versus an independent contractor is important for several reasons. For one, employees are entitled to statutory benefits and protections under the Employment Standards Act (ESA), such as minimum wage, notice of termination, severance pay and overtime pay. Independent contractors enjoy no such entitlement to ESA benefits and protections. In late 2017, the Ontario government amended several aspects of the ESA through the Fair Workplaces, Better Jobs Act, also known as Bill 148. Particularly notable was Bill 148’s tightening of the law with respect to classifying people as independent contractors. For employers who classified…

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Is a Prospective Employer Allowed to Lie or Mislead You During the Interview Process?

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When an employer deliberately misleads or lies to a prospective employee to induce him or her to accept an offer of employment, the employer can be held liable for negligent misrepresentation. Courts have held that both employers and employees owe a duty of care to each other during the recruitment process. The British Columbia Court of Appeal decision in Feldstein v 364 Northern Development Corporation provided employers with a reminder that negligent misrepresentation during the hiring process can prove to be a costly mistake. In Feldstein, a prospective employee for an engineering position was misled about the eligibility requirements for…

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When Is Post-Termination Income Deducted from Damages for Wrongful Dismissal?

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In Brake v. PJ-M2R Restaurant Inc., the Ontario Court of Appeal considered what type of income earned during the reasonable notice period should be deducted from damages for wrongful dismissal. After upholding the trial judge’s decision that the employee had been constructively dismissed, the Court in Brake confirmed that the trial judge was also correct in holding that the employee’s income during the reasonable notice period should not be deducted from the award for damages. The employee was awarded a twenty-month reasonable notice period after working for the employer for twenty years. The employee was a 62-year-old long-serving manager of…

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Future Proofing Employment Contracts: Ensuring the Validity of Termination Clauses

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Employers must exercise caution when drafting the terms of employment contracts. An improperly drafted provision in an employment contract can have unintended consequences, even if an employer’s application of that provision is valid in the given situation. Contract provisions must fall within the minimum standards set out in provincial legislation, and they must do so under all circumstances throughout their duration. The Ontario Employment Standards Act (“ESA”) provides the minimum standards for most employers and employees in Ontario. The ESA establishes rights and responsibilities for employers and employees, including the minimum standards surrounding reasonable notice of termination or payments in…

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Employers Beware: If You Allege Just Cause for Terminating an Employee, You Had Better Be Able to Prove It

By Uncategorized

In Ruston v Keddco Mfg. (2011) Ltd., the Ontario Court of Appeal considered the consequences of failing to prove an allegation of just cause for terminating an employee. In upholding the trial judge’s decision, the Court affirmed that employers may have to pay a terminated employee additional damages if they falsely or incorrectly allege cause for dismissal. The employee was 54 years old at dismissal and occupied the highest position as President of the company. He received quick promotions from his initial position as a sales representative in 2004. The employee had a grade 12 education and had been unsuccessful…

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Courts Will Not Make Your Illegal Termination Clause Valid for You

By Uncategorized

In order for a termination clause in an employment contract to be considered valid, it must adhere to the minimum standards under the Ontario Employment Standards Act (“ESA”). Many employers include termination clauses to reflect their intention to limit entitlements owed to a dismissed employee to those required by the ESA. In order for courts to consider the termination provisions in an employment contract valid, the clause must be drafted in a manner that clearly reflects the parties’ intentions to abide by the ESA’s statutory minimums. This includes addressing issues such as continued payment of employee benefits, severance, and providing…

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Can an Employer Act in Bad Faith by Concluding That an Employee Has Resigned?

By Uncategorized

An employer’s duty of good faith in the manner of dismissing an employee is a well-established principle of Canadian employment law. When initially established in Wallace v. United Grain Growers Ltd., breach of the duty – that is, bad faith conduct by an employer – became another factor that Courts would consider when determining the reasonable notice period for a terminated employee. Bad faith damages were typically referred to as Wallace damages and allowed Courts to extend the reasonable notice period where bad faith conduct by an employer was found. In Honda Canada Inc. v. Keays, the Supreme Court of…

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What Is the Maximum Notice Period an Employee is Entitled to?

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Absent exceptional circumstances, the maximum notice period is 24 months. It is widely recognized that a 24-month notice period represents the upper limit of an award for reasonable notice for long-term employees. While there is no absolute upper limit, the employee will need to present exceptional circumstances to support a notice period exceeding 24 months. In Dawe v. Equitable Life Insurance Company of Canada, the Ontario Court of Appeal considered an employee’s entitlement to notice and whether the trial Judge’s award of a 30-month notice period was appropriate in the circumstances. At the time of termination, the employee was 62-years-old…

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