In 2019, the Ontario Court of Appeal ("ONCA") provided us with guidance on matters of employment law. Below, in brief, are key points from many of ONCA's 2019 decisions relating to employment law.
- On sentencing and fines for regulatory offences, ONCA says... The most important sentencing principals for regulatory offences under the Occupational Health and Safety Act ("OHSA") are deterrence (i.e. for the individual) and general deterrence (i.e. the greater public). The fines imposed must be no greater than those which are required to meet the objectives of sentencing. The fitness of a fine under the OHSA can be determined by asking, "What amount of fine is required to achieve general and specific deterrence, and would otherwise be appropriate bearing in mind the principles of sentencing, including proportionality and parity?" Ontario (Labour) v. New Mex Canada Inc., 2019 ONCA 30
- On awarding punitive damages against employers, ONCA says... An employer's improper conduct in the course of terminating an employee's employment and during the course of the ensuing litigation may warrant an award of punitive damages against an employer. ONCA affirmed a $100,000 punitive damages award against the employer. Ruston v. Keddco MFG. (2011) Ltd., 2019 ONCA 125
- On the tort of intentional infliction of mental suffering, ONCA says... To make out the second branch of the test for the tort of intentional infliction of mental suffering (i.e. that the conduct was calculated to produce harm), the employee must show: (i) that the employer desired to produce the consequences that followed from the act/conduct, or (ii) the consequences of the act/conduct were known to be substantially certain to follow. The requirements of (i) or (ii) are important limiting elements of the tort of intentional infliction of mental suffering and distinguish the tort from an action in negligence. Colistro v. Tbaytel, 2019 ONCA 197
- On whether an employee owes a fiduciary duty to an employer, ONCA says... A senior level employee that forms part of an employer's "top management" and exercises discretion that affects the employer's legal and economic interests does not automatically owe a fiduciary duty to the employer. Whether an employee has a fiduciary duty to an employer is inherently a contextual and fact-specific determination. In making such a determination, it is unhelpful to focus on job titles. Plate v. Atlas Copco Canada Inc., 2019 ONCA 196
- On the "tort" of harassment, ONCA says... Current Canadian legal authority does not support the recognition of the tort of harassment. There are existing legal remedies to redress conduct that is alleged to constitute harassment, such as the tort of intentional infliction of mental suffering. "This [was] not the case whose facts [cried] out for the creation of a novel legal remedy..." Merrifield v. Canada (Attorney General), 2019 ONCA 205
- On continued employment after the sale of a business, ONCA says... Any provision in a contract of employment signed by an employee after the sale of a business that purports to contract out of, or waive, section 9(1) of the Employment Standards Act, 2000 ("ESA") (which deems that an employee's employment shall not have been terminated or severed for the purposes of the ESA after the sale of a business) is invalid. Such a provision constitutes an attempt to contract out of, or waive, an employee's minimum statutory entitlements under the ESA. Ariss v. NORR Limited Architects & Engineers, 2019 ONCA 449
- On fresh consideration after an employee's unequivocal resignation, ONCA says... Where (i) an employee unequivocally resigns, (ii) the employer accepts the employee's unequivocal resignation, and (iii) during the resignation notice period, the employee indicates that he/she would like to continue to be employed by the employer after the employer has acted in reliance on the resignation, an offer of employment is sufficient consideration for a new employment agreement and the employee's continued employment beyond the intended effective date of resignation. Theberge-Lindsay v. 3395022 Canada Inc., 2019 ONCA 469
- On the length of reasonable notice periods at common law, ONCA says... Only "exceptional circumstances" warrant a reasonable notice period in excess of 24 months. An employee's career-long years of service, senior position, age at the time of termination and difficulty in finding new employment, together, are not considered "exceptional circumstances". In and of themselves, such factors cannot support a claim for a notice period in excess of 24 months. A base notice period of 24 months already recognizes and rewards an employee for the employee's loyalty and dedication to a company over most/all of the employee's working career. Dawe v. Equitable Life Insurance Company, 2019 ONCA 512
- On entitlements under a shareholders' agreement during the reasonable notice period, ONCA says... The common law relating to compensation for breaches of employment contracts does not apply to an employee's entitlements under a separate shareholders' agreement. There is a difference between what a dismissed employee is entitled to as damages in lieu of notice upon termination of an employment contract and what the employee is entitled to under the terms of more specific contracts. An employee's entitlements relating to shares, pursuant to a shareholders' agreement, are separate and apart from the relief to which the employee is entitled arising from his contract of employment. Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515
- On determining whether damages in respect of employee benefits are payable during the reasonable notice period, ONCA says... First, you must determine the terminated employee's common law right to damages for breach of contract based on what the employee would have earned had he/she continued in his/her employment during the reasonable notice period. Merely finding that the compensation under the contract/benefit plan was an integral part of the employee's compensation package does not exhaust the inquiry under this first step. Second, you must consider whether the terms of the relevant contract/benefit plan alters or removes the presumptive common law right to compensation in lieu of that benefit on termination of employment. Monastersky v. Royal Bank of Canada, 2019 ONCA 609
- On dependent contractors, ONCA says... Exclusivity of service is determinative because exclusivity of service demonstrates economic dependence. Exclusivity is the hallmark of a dependent contractor relationship. Where a dependent contractor relationship is found but exclusivity is not absolute, substantially more than a majority of the dependent contractor's income must be earned from the contracting party. Near-exclusivity necessarily requires substantially more than 50% of the dependent contractor's billings. Thurston v. Ontario (Children's Lawyer), 2019 ONCA 640
- On whether wrongful dismissal damages should include pro-rata bonus amounts, ONCA says... Common law, wrongful dismissal damages should include compensation in lieu of a pro rata share of a bonus if the bonus is a non-discretionary and integral part of an employee's compensation package. The calculation of damages should include both (i) the bonus actually earned before the employee's employment was terminated, and (ii) the bonus that would have been earned during the notice period, unless the terms of the bonus plan alter or remove the right to a bonus during the notice period. Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679
- On the language required to limit the right to exercise options upon termination, ONCA says... Language such as "termination" or "cessation" of employment, without more, is insufficient to prevent a dismissed employee from exercising an option during the notice period. "Termination" or "cessation" are ambiguous and could refer to the date notice of termination was given or the end of the reasonable notice period. In the absence of clear language to the contrary, such ambiguity will be interpreted as requiring "termination according to law"—that is, termination at the end of the reasonable notice period.
O'Reilly v. IMAX Corporation, 2019 ONCA 991
As employment law continues to develop, we expect that ONCA will have more to say on these and other issues in the years to come!
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.