Compared with the last few years, 2024 was a somewhat uneventful year in employment law. However, we still saw our courts take some surprising stances on important issues, and in at least one case, our Court of Appeal chose not to take a stance at all. The following are the top Ontario employment law decisions of 2024.
1. Consideration
In Giacomodonato v. PearTree Securities Inc. 2024 ONCA 437 (CanLII) the Ontario Court of Appeal confirmed that Ontario courts are concerned with the existence of fresh consideration when a contract is signed by an employee mid-employment, but not with the adequacy of the consideration.
The parties in this case entered into one employment contract, and three months later entered into a second employment contract after the employee began employment. The second employment contract contained terms which were more restrictive for the employee than the first employment contract. The employee’s employment was terminated without cause and he alleged that he was wrongfully dismissed.
The lower court agreed with the employee that he had been wrongfully dismissed. In assessing damages, the employee argued that the terms of the first contract should apply because he was not provided with fresh consideration when he signed the second contract, rendering the second contract unenforceable. The employer maintained that the second employment contract was enforceable and that the termination clause in the second contract was applicable. The lower court agreed with the employee that he was entitled to fresh consideration when he signed the second contract. However, the court found that the employee was provided with (and accepted) two additional weeks of vacation and a $40,000 bonus, which constituted sufficient consideration. The employee appealed.
The Court of Appeal upheld the trial judge’s decision, confirming that the second contract was enforceable. The Court noted that an employment contract can only be unilaterally altered by an employer when something “new and of benefit” is given to the employee beyond continued employment. Importantly, the Court concluded that courts are concerned with existence of consideration, but not with its adequacy, confirming that consideration can be anything of value to the employee. The Court further confirmed that there is no need to do a comparative analysis of the overall advantages and disadvantages of the first and second contract in assessing whether consideration was provided. Any benefit given to the employee may serve as consideration.
2. Vacation pay entitlement on a discretionary bonus
In Gazier v. Ciena Canada, ULC 2024 ONSC 865 (CanLII) an employee with 22 years of service was terminated without cause. The employee filed a wrongful dismissal claim and raised a number of legal issues, including whether he was entitled to vacation pay calculated on his base salary and on the bonus he would have earned during the notice period.
The Superior Court of Justice noted that a bonus which does not depend on the discretion of the employer qualifies as wages under the Employment Standards Act, 2000 (the ESA), and therefore forms part of the earnings on which vacation pay would be calculated. However, in this case the employee’s bonus entitlement was discretionary and dependent on his performance and the company’s performance. It therefore did not form part of his wages. As a result, vacation pay should only be calculated on the basis of the employee’s base salary at the time of termination.
3. Reasonable notice period
In a decision which will no doubt act as a deterrent for employers, the Small Claims Court awarded a disproportionate reasonable notice period to a short-term employee. In Smith v. Lyndebrook Golf Inc. carrying on business as Lyndebrook Golf Course 2024 CanLII 103671 (ON SCSM) the employee was hired by the company as a Golf Superintendent. The parties did not sign an employment contract. A month into his employment the company terminated the employee’s employment. Although the company later stated that there were issues with the employee’s performance, it did not provide reasons for the termination and further provided the employee with two weeks of pay when his employment was terminated.
The employee filed a wrongful dismissal claim. The company filed a counterclaim for alleged costs incurred to fix items which were allegedly damaged by the employee during his employment. The Deputy Judge considered the Bardal factors as a whole, but seemed to have given more emphasis to the length of service and the timing of the termination. The employee was a short-term employee whose employment was terminated mid-season, making it difficult to find alternate employment as the season was already in full swing. Further, the employee held a very skilled position, making reemployment in his field during the same season challenging. Although the Deputy Judge specifically stated that the contract between the parties was not a fixed-term contract, he awarded five months of notice to the employee, essentially ensuring that the reasonable notice period covered most if not all of the season for which the employee was hired. The Deputy Judge also awarded symbolic moral damages to the employee in the amount of $100 for the company’s “hardball” tactics of making unsubstantiated allegations of impropriety and commencing a counterclaim to dissuade the employee from continuing with his action. The Deputy Judge determined that these actions were in breach of the company’s duty of good faith dealings with the employee, and warranted the payment of moral damages. The Deputy Judge declined to award punitive damages, however.
4. Workplace investigations
In Metrolinx v. Amalgamated Transit Union, Local 1587, 2024 ONSC 1900 (CanLII) five employees of Metrolinx filed a grievance following the termination of their employment for cause as a result of an investigation which concluded that they had engaged in workplace harassment. The five employees sent messages on a WhatsApp group chat on their personal phones in which they stated that a number of female employees, who they identified by name, engaged in sexual acts, including for the purpose of career advancement. One of the female employees who was discussed in the group reported the employees to her supervisor. She did not file a formal complaint and did not want the matter investigated. Metrolinx, aware of its obligation to investigate, commenced an investigation notwithstanding the absence of a formal complaint and despite the female employee’s request that the matter not be investigated. The investigation was completed and the employment of each of the five employees who sent the messages was terminated for cause based on the conclusions of the investigation.
The five employees filed a grievance which was referred to arbitration. The Arbitrator found that the grievors were terminated without just cause. The Arbitrator found that a fair and impartial investigation could not be conducted in the absence of a complaint and the complainant’s cooperation, and was in fact critical of the employer for proceeding with the investigation in those circumstances. Had the complainant truly experienced a hostile work environment or felt like she was a victim due to the messages sent by the grievors, she would have filed a complaint, the Arbitrator concluded. The Arbitrator also found that even if the conduct was inappropriate, it took place outside of the workplace and while the grievors were off duty, and therefore it was not conduct that engaged the legitimate interests of the employer.
Metrolinx applied for judicial review, asserting that the Arbitrator made several unreasonable findings. The Divisional Court agreed. The Court found that the Arbitrator’s reasons were wrong in law because they failed to recognize that even where a victim of workplace harassment does not report the harassment or participate in the investigation, the employer retains an obligation to investigate to protect not only the victim, but also others in the workplace. In its decision, the Court noted that the Occupational Health and Safety Act requires employers to investigate both complaints and incidents of workplace harassment where no complaint was filed. Once harassment is known to the employer, the obligation to investigate is triggered. The Court also noted that engaging in chats outside of the workplace on personal phones and off hours does not necessarily insulate the conduct from employer scrutiny. In this case, the messages made their way into the workplace, and therefore became a workplace issue.
5. Termination clauses
In a decision issued late in the year and highly anticipated by many, the Court of Appeal declined to opine on disputed language in a without cause termination clause.
In 2020 the Court of Appeal released its decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391 (CanLII), in which it first concluded that where a termination with cause provision in an employment contract violates the ESA, all of the termination provisions in the same contract are unenforceable. The Court of Appeal confirmed this finding in its decision in Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 (CanLII).
In Dufault v. The Corporation of the Township of Ignace 2024 ONCA 915 (CanLII) the parties entered into a fixed-term contract. The employee’s employment was terminated without cause and she brought a summary judgement motion, arguing that the termination clauses in the contract were unenforceable and that she was entitled to the remaining balance of the contract as a result.
The Ontario Superior Court of Justice agreed with the employee. It found the termination clauses to be unenforceable for several reasons, including:
- The termination for cause provision allowed the employer to terminate the employee’s employment for conduct that falls short of the ESA’s “wilful misconduct” standard without paying the employee her minimum statutory entitlements, in violation of the ESA;
- The without cause termination provision provided for the payment of “base salary,” rather than “regular wages,” contrary to the ESA; and
- The termination without cause provision permitted the employer to terminate the employee’s employment without cause “at any time” and “at its sole discretion” when the ESA prohibited it from doing so in certain circumstances.
As a result, the Court awarded the employee $157,071.57 in damages, representing her expected earnings for the remainder of the term of the contract.
The employer appealed the decision, giving hope to lawyers practicing in this area that perhaps the Court of Appeal would take another look at its decision in Waksdale and reconsider the current state of the law which renders without cause termination provisions unenforceable when with cause provisions in the same contract violate the ESA.
On December 19, 2024 the Court of Appeal released its decision on the appeal. The court concentrated its findings on the deficiencies in the for cause provision. It found that “cause” in the clause at issue is defined more broadly than “willful misconduct” is defined in the ESA, and therefore the contracting clause fails to comply with the minimum standards set by the ESA, rendering it unenforceable.
Much to the disappointment of the management side of the employment bar, the Court of Appeal declined to rule on the enforceability of the without cause provision on its own (and, specifically, the “at any time” and “at its sole discretion” language, which the lower court judge found to be problematic). Instead, the Court of Appeal relied on Waksdale to conclude that since the with cause provision was unenforceable, so was the without cause provision. The Court of Appeal added that since it was a three-judge panel which heard this appeal (rather than its full five-judge panel), it was bound by its own decision in Waksdale and could not revisit it, and that it therefore had no reason to review the “at any time” and “at its sole discretion” findings of the lower court.
Honourable mention goes to Bertsch v. Datastealth Inc. 2024 ONSC 5593 where a termination clause, which limited the employee’s entitlement upon termination of employment to the statutory minimums prescribed by the ESA, was upheld by the Superior Court of Justice. This in itself is no small feat given our courts’ decisions on termination provisions in the last few years, but the employer in this case was also successful in disposing of the claim at an early stage of the proceedings by bringing a motion to interpret the termination clause of the contract. In determining that the termination clause was enforceable, the Superior Court of Justice struck the employee’s claim at an early stage.
About the author
Inna Koldorf is a partner in Miller Thomson LLP’s labour and employment law group, where she advises employers on labour, employment and human rights issues. Inna is a member of the Labour & Employment Law Section Executive and currently serves as Technology Liaison.
This article was originally published by Law360.ca.
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