1. COVID-19 – temporary layoffs
Under the Employment Standards Act an employer is permitted to temporarily lay off an employee without any notice or pay in lieu of notice. During the COVID-19 pandemic, the Ontario government has extended the length of this temporary layoff on three occasions. It may do it again.
However, a temporary layoff is generally a termination at common law although there are exceptions. There are tens of thousands of laid off employees in Ontario who have wrongful dismissal claims against their employees. Many are waiting to find out whether they will be recalled before deciding whether to commence legal proceedings.
For those employees who commence legal proceedings during a temporary layoff and are still temporarily laid off at trial, my guess is that employer counsel will be asking judges to change the common law; that is, temporary layoffs that take place during the COVID-19 pandemic should not be considered terminations at common law. Stay tuned for the first decision that considers this argument.
2. COVID-19 – the 75% wage subsidy
Canada took longer than many countries to introduce a meaningful wage subsidy. Once it did so effective March 15, 2020, many employers decided to keep on employees they would have otherwise terminated. The wage subsidy was recently extended until June 2021. I expect a flood of terminations whenever the wage subsidy ends.
3. COVID-19 – remote working
During the first wave of the COVID pandemic, a large percentage of the workforce was not permitted to report to work as part of the Ontario government’s emergency measures. But many of these employees could and did work from home. In fact, many employees have been working remotely since March. Given the surge in COVID cases since the second wave began I predict many employees will continue to work from home well into 2021. I suspect there will be considerable more remote working once we get past the pandemic. This will create all kinds of legal and human resource challenges that will need to be addressed. From health and safety, to tracking productivity and performance managing, to mentoring, to team building, and to finding new ways to develop and foster an organizational culture etc.
[Note: Rocket Richard received all 3 stars following a game he scored 5 goals on March 23, 1944, because of his dominating performance. COVID gets my first 3 top stories because it has similarly dominated the employment law world in 2020.]
4. The Ontario Court of Appeal’s decision in Waksdale v Swegon North America Inc.
In this case, the O.C.A. stated that courts “will not enforce termination provisions that are in whole or in part illegal.“ Since the employer and employee both agreed that the termination for just cause clause did not comply with the Employment Standards Act the OCA concluded that the entire termination clause was unenforceable.
In the subsequent Superior Court decision in Sewell v. Provincial Fruit Co. Limited a judge followed the Waksdale case, concluded the following just cause clause did not comply with the Employment Standard Act, and therefore struck down the entire termination clause:
“The Company is entitled to terminate your employment at any time and without any notice or any further compensation for just cause and the Company will not have any further obligations to you whether at contract, under statute, at common law or otherwise.”
If this decision was correctly decided then I believe most termination clauses in Ontario employment contracts are not enforceable. Until the issue is decided by the Supreme Court of Canada I suspect many Ontario employers will be “updating” the termination clause in their standard employment contracts.
I sincerely hope the S.C.C. will grant leave to hear a case that addresses the enforcement of a termination clause that attempts to limit notice of termination to employment standards minimums. In the meantime, there will continue to be much confusion, legal uncertainty and litigation in relation to this issue.
The Supreme Court of Canada’s decision in Matthews v Ocean Nutrition Canada Ltd.
In this case, the S.C.C. concluded that a contractual provision that purported to deny an employee a significant payment during the common law notice period “must be absolutely clear and unambiguous” and the following language did not meet this test:
“ONC shall have no obligation under this Agreement to the Employee unless on the date of a Realization Event the Employee is a full-time employee of ONC. For greater certainty, this Agreement shall be of no force and effect if the employee ceases to be an employee of ONC, regardless of whether the Employee resigns or is terminated, with or without cause.”
In this case, the Realization Event took place 13 months after the employee’s last day of employment.
This case could very well result in increased settlements for terminated senior executives. I suspect corporations will also be “updating” their variable compensation plans as a result of this decision by the highest court in the land.
Doug MacLeod, MacLeod Law Firm
Latest posts by Doug MacLeod, MacLeod Law Firm (see all)
- Refusal to enforce non-solicitation clause - April 13, 2021
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