Another year is winding to an end – which, of course, means that it’s time to reflect on the legal developments that we have seen in Ontario during the year. In this blog, I will present my non-exhaustive list of the most interesting developments to employment law in Ontario in 2019.
Termination Clause Update
As I have previously discussed, termination clauses are regularly litigated, and 2019 was no exception. The most significant decision in 2019 was likely the Ontario Court of Appeal’s Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, released in late August. I have already discussed the decision in greater detail. Suffice it to say that the decision has injected further uncertainty into the legal effect of “failsafe” provisions in termination clauses – i.e., provisions which purport to “read up” otherwise unenforceable terms to comply with the Employment Standards Act, 2000 (the “ESA”). In Amberber v. IBM Canada Ltd., 2018 ONCA 571, the Court of Appeal had previously suggested that failsafe clauses will generally be effective to save an otherwise unenforceable termination clause. However, Andros arguably suggests otherwise, albeit in the context of a uniquely-phrased termination clause.
A second leading decision, Groves v. UTS Consultants Inc., 2019 ONSC 5605, further suggested a shrinking role for failsafe clauses. The employee worked for a business that was sold to a purchaser. Around the time of the sale, he signed a new employment agreement with the purchaser which purported to waive his length of service with the predecessor employer for the purposes of calculating “all entitlements”. The termination clause also included a failsafe clause. Nonetheless, the termination clause was held to be unenforceable by the court. The ESA requires successor employers to recognize an employee’s length of service with a predecessor employer for the purpose of, among other things, determining the employee’s entitlement to termination pay. As such, the clause violated the ESA. The court held that the failsafe clause could not save the termination clause, because a “a saving provision cannot be used to rewrite the express language in an agreement to cause it to comply”.
A third noteworthy decision was Waksdale v. Swegon North America Inc., 2019 ONSC 5705, in which the court confirmed that, in a contract containing separate clauses governing termination without cause and termination with cause, the alleged illegality of the with-cause clause does not impair the enforceability of an otherwise legal without-cause clause.
Bill 47 – The dust has (mostly) cleared
Most of the changes to the Employment Standards Act, 2000 set out in the provincial government’s Bill 47 came into force on January 1, 2019. I reviewed the noteworthy changes in an earlier blog, but the most prominent change for most employers was the replacement of 10 days (2 paid, and 8 unpaid) of “personal emergency leave” per calendar year with three new categories of leave: three days of unpaid sick leave, three days of unpaid family responsibility leave, and two days of unpaid bereavement leave per calendar year. Some employers have changed their policies as a result, while others have continued with the more flexible PEL days as a “greater right or benefit”.
While most of the changes in Bill 47 are relatively straightforward, we are still waiting for clarity with respect to some of the amendments made. For example, Bill 47 introduced the new “three hour rule” in the ESA which generally provides that an employee is entitled to a minimum of 3 hours’ regular wages if he/she regularly works more than three hours a day, is “required to present himself or herself for work”, and actually works less than three hours despite being available to work longer.
There are surprisingly few exemptions to this rule. Most notably, there is no exemption for managerial employees. Further, it is not entirely clear whether the three hour rule applies only if an employee is required to attend the employer’s place of business, or if it applies equally if the employee is “required” to work remotely. We are still waiting on an interpretation of the three hour rule from the Ontario Labour Relations Board or a court of law.
Legal Recreational Cannabis – the world spins on
Recreational cannabis was already legal when the calendar struck 2019. Many employers braced for the perceived storm by introducing revised drug and alcohol policies in their workplaces. However, if the (lack of) case law is any indication, legal cannabis arrived with more of a whimper than a bang. As of the time of writing, there were no major precedent-setting employment-related decisions in Ontario involving recreational cannabis. Fortunately, it does not seem that an epidemic of workplace impairment has struck Ontario.
That said, the “second wave” of legalization – edibles – arrived in Canada on October 17, 2019. That day marked the first where licenced producers could submit edible and topical cannabis products to Health Canada for approval, a process which expected to take 60-90 days. As such, in early 2020, edibles may start hitting the shelves. The arrival of edibles will likely lead to renewed concerns about cannabis in the workplace, which may precipitate further revisions to employers’ workplace policies.
General cap of 24 months’ reasonable notice remains
In May 2018, the trial decision of Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130 raised eyebrows throughout the employment law community. In that decision, Justice Gordon awarded an employee a common law reasonable notice period of 30 months, well exceeding the generally presumed limit of 24 months. In fact, in obiter, Justice Gordon indicated that he would have been inclined to award an even greater notice period, had the employee requested it: “I would have felt this case warranted a minimum 36 month notice period”.
The employer appealed, and the Ontario Court of Appeal’s decision overturning the trial award was released June 19, 2019. The Court of Appeal confirmed that “while there is “no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months”. The court held that no such exceptional circumstances existed in this case and reduced the award to 24 months’ reasonable notice.
Changes to civil procedure
While not directly employment-related, the provincial government recently announced upcoming changes to civil procedure in Ontario which will affect employment litigation. Effective January 1, 2020, the monetary limit for actions under the “simplified procedure” set out in Rule 76 will increase from $100,000.00 to $200,000.00 (in addition to several other changes to the simplified procedure, reviewed in greater depth by one of my colleagues). Further, the monetary jurisdiction of the Small Claims Court will increase from $25,000.00 to $50,000.00. These changes will likely impact a significant amount of employment litigation in Ontario and may help to reduce the time and cost of bringing such matters to a final judicial decision.
Of course, there were other relevant developments to employment law in 2019, but we could not cover all in one blog post. In any event, we will continue to provide timely and relevant updates for employers in the new year. From all of us at Siskinds LLP, have a great holiday season and a happy new year!