1. Inequality of Bargaining Power:
Employee has to provide some clear evidence of the special circumstances.
To avoid this claim, employers should provide employees with a written copy of
the contract, and a time to review and obtain independent legal advice.
Employers should also draw employees’attention to some key terms.
When the terms of a contract no longer reflect the realities of an employee’s
position within the organization.
• Employee starts out as junior employee and promoted to VP position, and
the contract doesn’t get updated
• Not enforceable, very significant difference in responsibility, court will
determine reasonable notice based on common law principles
Lyonde v. Canadian Acceptance Corp.
• 21 months of full payment
Irrcher v. MI Developments Inc.
To avoid this claim, employers should update employment contracts.
3. Failure to meet statutory minimums:
The clause is null and void à back to the common law.
Machtinger v. HOJ Industries Ltd.
o The clause in the case is void, below ESA
o Courts go to common law instead of ESAto ensure employers do comply
4. Use of ambiguous language:
“Contra proferentem” rule: unclear language will be interpreted against the
drafter of the agreement (usually the employer).
Common Contractual Terms
No termination notice required if contract is for a fixed term and employment ends at the
end of that term.
Ceccol v. Ontario Gymnastic Federation: employers should not be able to evade the
traditional protections of the ESAand common law by restoring to the label “fixed term”
contract. Should have given 16 months, gave 12 because she didn’t mitigate damage,
common law isn’t necessarily one month per one year
If employer terminates employee before the end of the fixed term, this is a breach of
contract and damages are based on the remainder of the term.
Liquidated damages- Include a clause in contract, “if we breach the clause we will
pay one month in damages”
An employer should include a clear termination clause that provides at least the minimum
Only a clear clause can rebut the common law presumption of reasonable notice.
Christensen v. Family Counselling Centre of Sault Ste. Marie and District
Worked for same employer for 7 years, gave 10 weeks pay, more than ESA, she
didn’t like that, initial contract only referenced employment manual for
termination, it was unclear and court ruled it was not enough to rebut the common
law presumption of reasonable notice, she got 8 months instead of 10 weeks
Better to deal with termination when the parties draft the contract.
May also include notice of resignation requirement.
Opportunity to test the employees’suitability.
Common law does not assume a probationary period à must put it in contract.
Under ESA, 3 months.
o 3 months to 1 year = 1 week.
o 1 year – 2 year = 2 weeks
Where probationary period exceeds 3 months, employer must give statutory notice to
employee who was dismissed after 3 months, unless the dismissal occurs for reasons
exempted from the statutory notice requirement (e.g. wilful neglect of duty).
Non-disclosure clauses: prevent an employee from using and disclosing confidential
information related to the employer. “client database, trade secrets, methods”
Non-solicitation clauses: prevent an employee from soliciting the employer's customers
Non-competition clauses: prevent an employee from competing with the employer.
Non-disclosure clauses are usually enforceable.
Acourt will carefully examine a non-solicitation clause to ensure that it is reasonable in
the circumstances. Courts don’t usually like non-competition clauses because sometimes the employees don’t have
the tools to find another job in a different field.
Non-competition clauses are presumed invalid unless the employer shows that:
o the clause is necessary to protect the employer's legitimate business interests;
o the clause covers a reasonable length of time and geographic area; and
• usually over a year or two may not be reasonable, city or province may be
reasonable, depending on the industry
o Anon-solicitation clause would not suffice.
• Usually a non-solicitation clause will suffice
Also, ambiguous clauses are unreasonable and unenforceable.
Remedy: it is generally inappropriate to rewrite or read down overly broad clauses to
render them enforceable (SCC in Shafron v. KRG Insurance Brokers (Western) Inc).
o In the United States- Blue pen remedy- courts change the clause to make it
o Canada- make the clause unenforceable
• Do this to force companies to be more cautious when drafting non-
Overly broad clauses will be held unenforceable
Lyons v. Multari,  O.J. No. 3462 (C.A.)
Dr. Lyons hired a new associate dentist to his clinic, Dr. Multari. They signed a short
handwritten contract. One of provisions read: “Protective Covenant. 3 yrs. – 5 miles.”
o Non-compete clause
Multari worked with Lyons for 17 months. He then left and together with another doctor
opened an oral surgery practice less than six months after he had left Lyons’practice. The
new office was located 3.7 miles from Lyons’office.
Lyons sued him for breach of contract.
Two conflicting common law principles: discouraging restraints on trade and respecting
freedom of contract.
Reconciliation is embedded in the notion of reasonableness.
o If the clause is reasonable, go with it
o If unreasonable, no constraints on trade
(1) Customary referrals are qualified as a proprietary interest capable of legal protection.
(2) The clause is reasonable in terms of time and space.
(3) Non-solicitation clause would adequately protect employer’s interest: o Multari was not the front man (face of the business), or principal contact person,
for communication with referring dentists.
o Anon-competition clause should be enforced “where the nature of the
employment will likely cause customers to perceive an individual employee as the
personification of the company or employer”. That description does not fit
o The courts have recognized and afforded reasonable protection to trade secrets,
confidential information, and trade connections of the employer. In our case, a
simple non-solicitation covenant would have prevented Multari from soliciting
The non-competition clause is unenforceable.
Globex v. Kelcher, 2011 ABCA240
MacLean accepted restrictions as a term of his initial employment and was later
wrongfully dismissed by the employer. Kelcher and Oliverio agreed to restrictions during
their employment, but received no new benefits for doing so. They eventually left when
the employer asked them to accept other more onerous restrictions. All three joined a
competitor and were sued by the employer.
3 employees, M fired without advanced notice, signed non-compete clause
2 other employees, K,O signed non-competition clause after original contract, no new
Went to work with competition
Majority decision of theAlberta Court ofAppeal:
Arestrictive covenant will not be enforced unless it is supported by consideration;
Wrongful dismissal is a repudiation of an employment contract by an employer. It thus
renders restrictive covenants in that contract unenforceable;
Restrictive covenants will not be enforced if they are unreasonable.
Why are ICs Popular?
Advantages to the Organization include:
No statutory remittances (CPP, tax, EI) or WSIB
No employment standards protections (e.g. pregnancy leave, vacation, overtime
No common law wrongful dismissal claims
Less liability for damages
IC or Employee? Legal distinction is important but often difficult to make.
Degree of control
Employer tells employee what to do, when, where, how, supervised
Labour is not a commodity
Ownership of tools;
• Did the organization give you the tools to work with
Chance of profits;
• Usually an independent contractor has the chance for more profits
and more losses
Risk of loss
Integral part of organization, employee
How much time do you work for this person, longer = employee
Dependent on company, only source of company
Example- work at Ryerson, large degree of control, supervised, reports, tools- supplied by
school, profits- salary, integration- teach, durability – 3 years open ended, exclusivity- not told to
not work someone else
Painter at house- control- not significant, tools- didn’t tell what to use, profit/loss – no fixed
hourly rate, integration- not integral part of organization, durability- 1 day fixed term,
exclusivity- can paint other people
Own a restaurant, weekly gets someone to clean- one time sick sent husband, brings own
products, tell where to clean and picky, Christmas gets bonus, hourly 15$/ hr, 10 years, usually
works Friday, terminated.
How to Improve Odds of IC Finding
No statutory deductions or ESAstandards
Allow IC to work for others Avoid setting hours
IC should charge GST and interest on late payments
Minimize IC’s integration into organization
Allow IC to accept or refuse work
Have IC purchase own insurance
No performance reviews
Work offsite if possible
Common Law Issues- Hiring
• Misrepresentation by Job Candidate
• Negligent Misrepresentation
• Restrictive Covenants
• Anticipatory Breach of Contract
• Background Checking
o Issues with common laws – human rights
Misrepresentation by Job Candidate
Misrepresentation is a false statement expressed during negotiation of a contract.
There is no legislation that requires job candidates to be honest during the application
However, a misrepresentation by a job applicant will be just cause for dismissal where it
goes to the root of the qualifications for the job:
The false statement related to qualifications or work experience has a significant
impact on the hiring decision;
The false statement (which may not be material to the hiring decision) suggests an
inherent lack of honesty, especially when the job requires a high degree of trust
Just cause- do not need notice of termination = serious misconduct or really poor
The employer has an obligation to ensure that material statements made during the
recruitment process are accurate.
Employee has to prove five elements (Queen v. Cognos) p.67:
There must be a duty of care based on a special relationship between the parties; Representation must be untrue, inaccurate, and misleading;
The party making the representation must have acted negligently in making the
The candidate must have reasonably relied on the negligent misrepresentation;
The reliance must have caused harm to the candidate.
Executive Search Firm Misrepresentations
The employer is generally liable for negligent misrepresentation by a recruitment firm.
An executive search firm may be held liable if it is negligent in the way it conducts its
search and the employer suffers damages as a result (Treaty Group Inc. v. Drake
Two different claims:
Tort claim (inducement to breach of contract): when the former employer sues the
new employer for inducing his or her employee to breach their employment contract.
Contractual claim: when the employee who was induced to leave a secure job and work
for a new employer at the prospects of obtaining job security, is subsequently dismissed
by the new employer (Egan v. Alcatel Canada).
The court may extend the notice period of reasonable notice.
o More than 24 months
o If there isn’t anything that suggests there was misleading statement no
Contract terms that restrict an employee’s actions when employment ends:
o Cannot reveal anything of previous employer
o Cannot call previous clients to come to new company
o Cannot work for company competing with former employer
If employer breaks (repudiates) the employment contract before employment begins, it
may be in breach of contract.
The remedy is wrongful dismissal damages. The employee has to show that:
An offer of employment was made;
The offer was accepted;
The contract was then repudiated by the employer through statement or conduct;
The employee suffered damages as a result.
Repudiation may sometimes be justified (e.g. something has changed after job offer was
made and accepted).
Level of diligence depends on position
Get applicant’s written consent
Only collect work-related info
Education and Professional Credentials
Police Record Checks
Chapter 12: Resignation and Retirement
If employee quits, employer only owes employee outstanding wages and vacation pay.
A letter of resignation generally binds an employee.
Sometimes employee may retract a written resignation up to the time that the employer
formally accepted it.
Employer should therefore send a letter of acceptance as soon as possible.
Resignation must be voluntary.
• Unilateral change of fundamental employment – changing morning to night or
Toronto to Vancouver
o Constructive dismissal
Resignation may be inferred from employee’s conduct.
• Return keys, uniform, don’t show up to work To ensure that resignation is binding, employer should accept it in writing.
Employee’s intention to resign has to be clear and unequivocal:
• Pollock v. First Heritage Financial Planning
o Employer changes terms of compensation packages, employees don’t
accept, employer “accepted termination” and the employees sued for
• Gilbert and Tandet Transport
• Even if employee says “I quit”, employer must consider employee’s emotional
state (Robinson v. Team Cooperheat-MQS)
o Employee accused of bullying, frustrated said he quit. Next day came back
didn’t want to quit, employer said he already accepted resignation
o Court concluded wrongful dismissal, one year salary and damages
o Allow cool off period – day or two
If employer doesn’t want employee to work during the notice period, employer has to
accept resignation and advise the employee that he or she will be paid throughout the
notice period but should not attend work.
• There is a common law implied term, that employees should give reasonable
notice upon termination
• There is no statutory law that employee has to give notice
• Under the common law, employee has to provide reasonable notice of resignation.
o Implied duty
• In practice, employers rarely sue employees (but see Tree Savers International v.
o 2 employees left the same employer and opened a competing business,
damages totaled $73,100
Ending Mandatory Retirement
Effective December 12, 2006, most Ontario employers are no longer able to insist on
employees leaving just because they reached age 65.
• The federal government is legislating this nationally
• Employer can force retirement, if age is a genuine requirement of the job (rare)
o Usually on case by case basis
• Difficult to prove “age” is a BFOQ • Increased demands for accommodation
o Hearing impairment
• Performance management issues
• Succession planning/regeneration
• Age discrimination allegations
• Pension, benefit plan issues
The Employment Standards Act
• General Requirements
• Minimum Employment Standards
• Administration and Enforcement
The Employment Standards Act
Sets minimum terms and conditions of employment.
Parties cannot go below the ESAstandards.
Parties can negotiate a greater right or benefit (only if it is related to specific
entitlement under the ESA).
Applies to employees (not independent contractors).
Specific categories are not included (e.g. police officers, lawyers, accountants).
Specific exemptions apply to certain industries and jobs (e.g. managerial and supervisory
Except for few provisions, ESA binds all employers regardless of size.
Enforcement of rights under ESAis a complaint-based process.
Employer’s General Obligations
To keep specific records (s. 15).
To display Ministry poster containing key employee rights (s. 2).
To pay wages (s. 11).
To provide Statement of Wages (s. 12).
Employer cannot withhold or deduct any wages payable to employee, unless it is (s.
obliged to do so by statute;
obliged to do so by a court order; authorized by the employee to do so in writing.
o Cannot be general, must be specific and method of calculation
Employer cannot make deduction from wages to cover faulty work (Hutchins v. Atlantic
Provincial Security Guard Services).
With proper authorization, employer can make deduction for cash shortage, lost or stolen
property, if employee is the only one with access to and total control over cash or
Employers are permitted to recover genuine wage advance or unintentional overpayment.
Minimum Wages (s.23)
General minimum wage: March 31, 2010 - $10.25
Special minimum wage rates (e.g. students under 18).
Special rules in specific situations (e.g. commissions).
When an employee is not paid by the hour:
Erica worked 40 hours in one week and earned $280 in commissions. Erica
earned $7.00 per hour ($280 divided by 40). Employer owes Erica $3.25 more per
hour (40 hours x $3.25 = $130.00).
Hours of Work (ss.17-21)
Maximum 8 hours in a day and 48 hours in a week.
Written “excess hours agreements” (agreement to vary):
to vary the statutory maximum daily hours
to vary the statutory weekly hours
Emergencies (s. 19): "only so far as is necessary to avoid serious
interference with the ordinary working of the employer's establishment or
operations". Natural disaster, fire, flood. Not absenteeism.
Employees are entitled to have a certain number of hours free from work.
Employers must provide a 30-minute eating period after 5 consecutive hours of work.
Employee must be free from work during the eating period, and employer is not required
to pay for this time.
Overtime Pay (s.22)
Employers must pay overtime pay (1.5 times regular rate) after 44 hours in a week.
Joe makes $12.00 an hour. Every hour worked after 44 hours in a week, he must
earn at least $18.00.
Managers and supervisors are exempt: Tri Roc Electric Ltd v. Bulter:Any employee who regularly performs non-
managerial duties is eligible for overtime pay.
Employee who performs several kinds of work is eligible for overtime pay if at least 50
percent of the hours are in a job category that qualifies for overtime pay.
Maya worked 27 hours as a dispatcher (covered) and 23 hours as a cab driver (not
covered). She worked more than 50% (27⁄50) as dispatcher; she is therefore
entitled to overtime pay for the 6 overtime hours.
Salaried employees (wages are not based on the number of hours worked) are entitled to
Sharon’s salary is $550/week. She worked 52 hours this week. To determine
hourly rate, divide salary ($550) by 44 = $12.50/hour. Overtime rate is 1.5 x
$12.50 = $18.75; $18.75 x 8 hours = $150 overtime pay (in addition to her $550
salary for that week).
Parties may agree in writing that employee’s hours of work may be averaged when
determining entitlement to overtime pay:
Requires the approval of the Director of Employment Standards.
Overtime pay is payable after employee has worked an average of 44 hours a
week over the agreed period.
Example of averaging agreement:
EE works 56 hours in Week 1 and 38 hours in Week 2. ER must pay EE 12 hours
overtime pay in Week 1 and none in Week 2. With averaging agreement, the total
number of hours for the two weeks is 56 + 38 = 94 hours that are divided by 2 for
an average of 47 hours. ER must pay 3 hours at overtime rate each week.
Parties may agree in writing that employee will receive paid time off work instead of
Employee must receive 1.5 hours of paid time off for each hour of overtime
Samira works 50 hours in a week (6 hours over 44), so she is entitled to 9 hours
off with pay (1.5 x 6 = 9).
After 12 months of employment, employee is entitled to 2 weeks’annual vacation.
Inactive service counts.
Employer decides when vacation time will be taken but it must be within 10 months after
it is earned.
Example: Jacob is hired on Jan 1, 2008. He is entitled to take his vacation time by
November 1, 2009. Vacation pay
4% of wages earned during the 12 month period for which the vacation pay is given.
Entitlement to vacation pay begins from the first hour of employment.
Example: Jen earns $40,000 per year. Her vacation pay is $1600.
Public Holidays (ss.24-32)
Employee must work the regularly scheduled day before and after public holiday (unless
employee has reasonable cause for not working those days).
To calculate public holiday pay, take total amount of regular wages and vacation pay
payable to the employee in the four work weeks prior to the work week in which the
public holiday occurs and divide by 20.
Example: over four weeks Farida earns $2000. Her public holiday pay is $100
($2000 divided by 20).
S. 28: Special rules apply to certain industries where employee can be required to work
on public holiday (subject to Human Rights Code).
Pregnancy Leave (ss. 46-47)
Limited to biological mother.
17 weeks of unpaid (by employer) time off work.
Employee may qualify for Employment Insurance benefits.
To qualify, pregnant employee must have been hired at least 13 weeks before the
expected due date.
Parental Leave (ss. 48-49)
Leave is 35 weeks for birth mother and 37 weeks for other parents.
All parents, except birth mother, must begin leave within 52 weeks after child first comes
into their care.
To qualify, parent must have been hired at least 13 weeks before leave begins.
Personal Emergency Leave (s. 50)
Unpaid leave for:
• personal emergencies, or
• death, illness or medical emergency or other urgent matter relating to specified list
Up to 10 days per calendar year.
Applies only to employers with 50 or more employees in Ontario.
What happens in a smaller workplace? • Do not get unpaid leave, 50+ employees > employer cannot penalize
• No protection
• Severe illness, cancer, 20 employees, can be fired, can argue fired based on
Family Medical Leave (s. 48)
Any employee may take up to 8 weeks’unpaid leave within a 26-week period to care for
gravely ill family member.
Need certificate from a “qualified health practitioner” stating significant risk of death
within 26-week period.
Declared Emergencies (s. 50.1)
In addition to “Personal Emergency Leave”.
Where government declares an emergency (e.g. SARS crisis), employees have job
protected rights to an unpaid leave where:
They are the subject of an emergency order,
They are needed to take care of a family member because of the emergency.
Reservist Leave (s. 50.2)
Military reservists in Ontario now have job-protected leave if they have worked with the
employer for at least 6 consecutive months before deployment.
Organ Donor Leave
Bill 30: Family Caregiver Leave
o Not an act yet
• It will provide more protection, 8 weeks unpaid leave in any organization
in a case of serious medical condition, only relatives, not yourself
Rights during Leaves (ss.51-52)
Individual taking a statutory leave has a right to:
Reinstatement to same job (or comparable job if same job is not available for reasons
unrelated to leave):
The onus is on the employer to prove that there was no connection between the
leave and the termination.
The test is whether or not the employee would have lost her job if she had not
taken leave (the but-for test).
P.S.S. Professional Salon Services Inc. v. Saskatchewan illustrates the high
standard of proof.
Salary plus increases Employer benefit plans
Be free from reprisals
S.74(1): Right to be free from Reprisals
“No employer … shall intimidate, dismiss or otherwise penalize an employee or threaten to do
so, (a) because the employee, (i) asks the employer to comply with this Act and the regulations,
(ii) makes inquiries about his or her rights under this Act, (iii) files a complaint with the Ministry
under thisAct, (iv) exercises … a right under thisAct, (v) gives information to an employment
standards officer, (vi) testifies … in a proceeding under thisAct … ”
How to File a Claim?
Unionized employees must use grievance process under collective agreement.
Non-unionized employees may file compliant with Ministry of Labour.
6 months for wage recovery (1 year where repeated infractions and at least 1 of
violations within 6 months).
2 years for non-monetary v