Canada: Three Ways To Avoid Employment Disputes

Last Updated: September 10 2008
Article by Peter Eastwood

Most Read Contributor in Canada, November 2017


Employment disputes take many forms. When dealing with disgruntled employees (or, more typically, former employees), employers will often find themselves in front of courts, arbitrations, tribunals or regulatory bodies – and often several of these at once. Increasingly, employers are finding just how difficult it is to wage such legal battles on several fronts. Dealing with the media attention from a human rights complaint on one hand and an expensive wrongful dismissal action on the other can quickly deplete a company's resources and public goodwill.

Short of settlement, the most effective way to deal with employment disputes is to avoid them in the first place. Here are three things that every employer should know about current employment issues.

Be Aware of Statutory Responsibilities

For years, employment standards complaints were often considered the "kid brother" of more significant employment litigation. Many employers were content to continue with practices and policies that did not comply with legislated standards, in the belief that such complaints could be easily dealt with when they arose.

Those days are over. As the widely-reported overtime class action cases brought in the past year against CIBC, KPMG, Scotiabank and CNR demonstrate, the stakes for non-compliance with statutory obligations have been dramatically raised. In the CIBC case, the bank is being sued in Ontario for $600 million dollars relating to unpaid overtime under the Canada Labour Code.

These cases indicate that Canadian employment law is following the pattern of the U.S., where employment-related class actions have become increasingly popular. The rise of the class action has enormous ramifications for employers. Class actions dramatically level the playing field for employment litigation. By leveraging resources in this way, employees can pursue claims that would otherwise be uneconomical.

For example, a single employee is unlikely to pursue a $1,000 claim in court, given the legal fees involved (and few lawyers would agree to take on such a case, even on a contingency fee basis). However, if 100 people pursue the same claim, it is now worth $100,000 in total. One starts to appreciate how in the CIBC case the overtime claims of an estimated 10,000 employees can add up to a $600 million claim. There is also strength in numbers – employees are more likely to sue their current employer in a class action than individually. In fact, the statement of claim in the CIBC case pleads that the employees "risk losing their jobs if they pursue their individual claims."

Many employers do not comply with employment standards legislation, particularly its often-misunderstood requirements about overtime and vacation pay. The increased attention on these issues reflects a truth about modern workplace culture – people are working longer hours, in large part because of technology, which has blurred the boundaries of the workplace and home. Employers often attempt to address this issue through compensation and bonuses, rather than the payment of overtime. However, in doing so, they are not complying with employment standards legislation, which requires employers to keep detailed records of every hour worked by an employee, and to pay overtime (for all non-exempt employees) for all hours worked in excess of eight in one day or 40 in one week. Until recently, employers were often content to risk employment standards complaints – which, at the initial level, are not publicly-released decisions and which have a six-month "cap" on damages.

A number of large companies, including several major U.S. employers – Wal-mart, Starbucks, Taco Bell and Radio Shack – have reportedly been forced to pay enormous overtime settlements to employees. The publicity generated by these recent cases may result in more Canadian companies facing similar fates.

If there is one certainty raised by these class actions, it is the importance of ensuring that your company's policies and practices comply with all applicable employment legislation. The stakes are now too high to be complacent.

Use Employment Agreements Effectively

The ultimate preventative tactic for many employment liabilities is to resolve them at the outset, through an employment contract. However, many companies don't include in such contracts important terms, such as termination clauses and non-competition provisions. Worse, some don't use written employment agreements at all. Several developments have underscored the importance of clearly setting out what the parties' obligations and entitlements are on termination of employment.

First, awards of damages in lieu of reasonable notice of termination for shorter-term employees have crept upwards in recent years. In several cases, courts have awarded up to six months' notice to senior employees with only a few years' service. Therefore, it becomes even more important to address and "cap" that liability at the outset of employment. In recent years, courts have shown a willingness to enforce properly-drafted termination clauses, provided the terms are not manifestly unfair and the contracts were not entered into under duress.

Second, recent cases have demonstrated the difficulties faced by companies in suing former employees who have joined competitors. In one recent case, several key employees left a brokerage to join a competitor, and then began doing business with their previous clients using confidential information they had removed in the weeks leading up to their departure. In overturning the trial judge's decision, the Court of Appeal found that no obligation for an employee not to compete unfairly with a former employer after leaving employment exists outside an employment contract. This decision has been appealed to the Supreme Court of Canada. However, regardless of the outcome, the case emphasizes the importance of entering into non-competition agreements with key employees at the outset of employment.

As with any contractual provision, it is important to ensure that termination and non-competition clauses are clearly drafted, entered into freely and for consideration (i.e. the employee is getting something in return for agreeing to the restriction), and comply with employment standards legislation.

Treat Employees Fairly

Traditionally, employment cases have not seen significant damage awards. This has also changed dramatically in the past few years. Several Canadian courts have recently punished employers with unprecedented punitive damage awards for acting harshly towards employees. Increasingly, employees have a variety of forums in which to bring claims related to their treatment, including human rights tribunals, occupational health and safety regulators, and even the criminal courts.

The most startling development in the past few years was an Ontario decision that awarded a disabled employee a 24-month notice period and $500,000 in punitive damages. Although the Ontario Court of Appeal and Supreme Court of Canada subsequently overturned the punitive damage award and reduced the notice period to 15 months, the case served notice on employers that, in the right circumstances, "hardball" tactics may be severely punished. In that case, the courts determined that the employer did not have cause to terminate a chronically-absent employer after he refused to meet with a company doctor.

Other decisions have emphasized the importance of protecting employees from any threatening or abusive treatment. In a recent B.C. decision, a former RCMP officer was awarded $950,000 in damages as a result of repeated harassment from the commander of her detachment. Intimidation or coercion aimed at preventing an employee from bringing complaints or reporting unlawful conduct can expose an employer to claims under the Workers Compensation Act or Human Rights Code, and even criminal charges under the new "whistleblower" provisions of the Criminal Code. Employers should ensure that managers and supervisors are aware of their legal duties and responsibilities to maintain a safe, healthy and respectful workplace for all employees.

Final Thoughts

These examples showcase some of the ways in which problems in the employment relationship can be prevented. Many employers are discovering that it is increasingly important to deal actively with potential claims – to keep up to speed on regulatory requirements, such as obligations under employment standards and occupational health and safety legislation, and to be proactive about difficult issues such as employee layoffs and competing employees. By dealing with these issues head on, prudent companies are minimizing the amount of time, and number of tribunals, in which they deal with employment-related disputes.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions