Peppercorns Still Valid Consideration for Fundamental Changes

What sort of consideration is required for an employer to make fundamental changes to the terms of an employee’s employment agreement?

In the case of Lancia v. Park Dentistry, 2018 ONSC 751, the Honourable Justice Andrew J. Goodman of the Ontario Superior Court of Justice confirmed the longstanding legal principle that a “peppercorn” will do. The court also confirmed that consideration for a new agreement is not required where the employer provides reasonable notice of the termination of the existing agreement.

Termination for “Cause” Provision Violates the ESA

Does a termination clause that only allows an employer to terminate an employee without notice for “just cause” comply with the provisions of the Ontario Employment Standards Act, 2000?

In the case of Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617, the Honourable Justice Carole J. Brown of the Ontario Superior Court of Justice held that it does not.

The ONCA's Decision in the Uber Case and the (Il)legality of Arbitration Clauses in Employment Contracts

Will an arbitration clause in independent contractor agreement always be found to be illegal, if, notwithstanding that to which the parties ostensibly agreed, the worker can later allege that he is, in fact, an “employee”?

A cursory reading of the Court of Appeal for Ontario’s decision in Heller v. Uber Technologies Inc., 2019 ONCA 1 might lead those who do not practice in the area of employment law to conclude that the answer is “yes.”

I might not be so sure.

Today’s Tip for Making a Termination Clause Legally Binding: KISS

Stop me if you’ve heard this one before: An employer attempts to limit, by employing a contractual termination clause, its obligation to provide notice of termination to no more than the statutory minimum amount prescribed by the provisions of the Employment Standards Act, 2000 and the employee alleges that such clause is void ab initio because it violates the strictures of such statute. In Burton v. Aronovitch McCauley Rollo LLP, 2018 ONSC 3018 (CanLII) the Ontario Superior Court of Justice once again had reason to examine such arguments.

In this case, however, the court considered all of the earlier decisions in Roden, Wood, and Nemeth.

Everything New is Old Again: Continuity of Employment in an Asset Sale at Common Law

What happens in an asset sale transaction, if the purchaser / new employer neglects to give actual notice to an employee of the vendor, whom the purchaser intends to employ, that the employee will not be credited for his past years of service with the former employer/vendor once he becomes an employee of the purchaser?

According to a 2018 decision of the Ontario Superior Court of Justice sitting at Ottawa, Ariss v. NORR Limited Architects & Engineers, 2018 ONSC 620 (CanLII), the answer is:

In the absence of notice from new employer/purchaser that an employee will not be credited for his years of service with former employer/vendor, recognition of that service is deemed to be part of employee’s contract of employment with purchaser – regardless of any letter of termination actually received by the employee from the vendor.

Brave New World: ONCA Says that in Asset Transaction, an Offer of Employment is Sufficient Consideration for Material Changes

In an asset-sale transaction, if the purchaser offers to employ an employee of the vendor, can the purchaser vary some (or all) of the fundamental terms of the employee’s employment contract and rely on the offer itself as sufficient legal consideration for such changes?

In the case of Krishnamoorthy v. Olympus Canada Inc., 2017 ONCA 873, Ontario’s top court ruled that it can.

Undertaking to Comply with the ESA does Not Displace Common Law Presumption of Reasonable Notice

Does an employer’s undertaking to “comply with its obligations under the employment standards legislation” displace the common law presumption of termination only upon the provision of reasonable notice?

In a decision released October 20, 2017, Nogueira v Second Cup, 2017 ONSC 6315 (CanLII), the Honourable Justice Edward M. Morgan of the Ontario Superior Court of Justice ruled that it did not.

Such decision is yet another in the long series of decisions to consider what it takes to contract out of such entitlement and, for the reasons that follow, it leaves this employment lawyer saying: ¯\_(ツ)_/¯

Scissors Beat Paper; Statutes Beat Scissors: Severability Clauses Can't Fix Illegal Termination Provisions

Everyone knows that in the classic children's game, Rock, Paper, Scissors, scissors beat paper. But can scissors beat statutes?

To the point, can a trial judge use a severability clause to excise the offending portion of a termination provision, keeping the remainder of such provision enforceable? While that question might seem highly academic, it is one of critical importance to anyone employed pursuant to the terms of a written employment contract.

In North v. Metaswitch Networks Corporation, 2017 ONCA 790 (CanLII), the Court of Appeal for Ontario finally laid to rest both this issue and its earlier decision in the much-maligned case of Oudin v. Centre Francophone de Toronto, Inc., 2016 ONCA 514.

Beware the Innocuous Termination Provision

(c) istock/miluxian

It is often said that, “a magician never reveals his secrets.” If that is true, then it is a good thing that I am not a magician.

There is a phrase employed in countless employment agreements, which, on its face, appears innocuous. As will be explained below, notwithstanding the fact that this one simple, seemingly benign phrase can cost workers literally thousands, if not tens or even hundreds of thousands of dollars, few employees will ever give a second thought to accepting such a contractual provision.

While I suspect that many employment lawyers know exactly to what I refer, I would suspect that few outside this union of magicians would have any clue to what I am making reference.

Court of Appeal Finally Brings Much Needed Clarity to Issue of Benefits in Contractual Termination Provisions

(c) istock/Choreograph

It’s here. On February 23, 2017, the Court of Appeal for Ontario released its much anticipated decision in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (CanLII).

After an initial reading of the case I tweeted, “I think we have our number one case of importance to Ontario Employment Law for 2017.” To which one observer responded, “Sean, it is only February! I will remember this tweet when you write your annual "Top 5" cases.” While I stand to be corrected in ten months, I was aware of the date when I authored that tweet.

While Wood is not quite everything that I had hoped it would be, it’s still a lot of things. It could well be the most important decision to Ontario employment law this year.

Employment Contract Deemed Void Ab Initio for Failing to Account for Hypothetical Severance

If an employment contract makes no mention of the payment of statutory severance in the event of a termination without cause, is the contract legally unenforceable regardless of whether the employee is actually entitled to severance at the time of dismissal? That is to say, must an employment agreement account for all future hypothetical scenarios in order to be legally binding?

In the case of Garreton v Complete Innovations Inc., 2016 ONSC 1178 the Honourable Mr. Justice Laurence A. Pattillo endorsed the words of Justice Low in Wunderman, “It is not that difficult to draft a clause that complies completely with the Act, no matter the circumstance” and held that, unless an employment contract would always be valid, no matter what the reality at the time of termination, it is void from the start.

Why You Should Hire Me Before You Hire Another Employee

If you are an employer and you are looking to hire one or more new employees for your company, let me explain to you why you should hire me first to prepare your company’s employment contracts: it will (almost assuredly) save you money.

I know it sounds contradictory that you can likely save money by hiring a lawyer to prepare your employment contract, for which there will be a very reasonable cost, but believe me it is true. Please allow me to explain – there is no charge for reading and if you are not convinced by the end of this post, you can move on to something else and it will not have cost you a dime.

Divisional Court endorses Wunderman, Rejects Ford v Keegan

If an employment contract’s termination provision has the potential to violate the Ontario Employment Standards Act, 2000, but is legally compliant at the time of termination is it legal or not?

The issue has been litigated several times. On February 16, 2016, the Honourable Justice Laurence A. Pattillo, writing on behalf of the Ontario Divisional Court, provided his position on the debate in the case of Garreton v Complete Innovations Inc., 2016 ONSC 1178 .

Employee "On Probation" Terminated Without Cause after Five Months of Employment Not Entitled to Any Notice: Div Court

What is the legal effect of being “on probation”? While this blog has looked at the issue of an employee being employed pursuant to a written employment contract containing a period of probation, (see Ontario Court Awards Four Months Notice to Employee Fired while “On Probation”), a recent decision from the Ontario Divisional Court provides a new wrinkle to this issue.

In Nagribianko v Select Wine Merchants Ltd., 2016 ONSC 490 the Ontario Divisional Court, sitting as the court of appeal from a decision of the Ontario Small Claims Court found that “in the absence of bad faith, an employer is entitled to dismiss a probationary employee without notice and without giving reasons.”

For the reasons argued below, I would respectfully submit that the court in this case got it wrong.

“Benefits”: The Most Important Word in Ontario Employment Law

What is the most important and expensive word in Ontario employment law? “Benefits.” That one single word has cost more employers more money, and created more headaches and confusion for Ontario employment lawyers over the past four-to-five years, than any other.

Why is the word “benefits” so important, expensive, and frustrating? Because there is a debate in Ontario jurisprudence as to whether the failure to specifically say “benefits” in a contractual termination provision renders the contract “void ab initio”, that is void from the start.

A decision of the Ontario Superior Court of Justice, released October 29, 2015, Oudin v Le Centre Francophone de Toronto, 2015 ONSC 6494 (CanLII), only serves to add to the confusion.

Too Little, Too Late. Employer Could Not Impose New Terms via Contract after Employee Accepted Letter of Offer

What happens when a potential employee signs a letter of offer, which letter makes reference to an employment agreement “to follow”, the terms of which agreement differ substantially from what is contained in the offer letter? Will the court uphold the terms of the full contract?

Put another way, can an employer make a basic offer of employment to a candidate, advise the candidate that he will be required to sign a full employment agreement at some later time, and then impose new terms via that full contract?

I have repeatedly answered that question in the negative, see e.g. No Changes Without Consideration, published June 2, 2012. More recently, on November 10, 2015, (and with much more authority) the Court of Appeal for Ontario, in its reasons for decision in Holland v. Hostopia.com Inc., 2015 ONCA 762 (CanLII) said exactly the same thing and for essentially the same reason.

Failure to Pay Statutory Severance ‘Okay’ because Employer Offered to Do So

Does an employer’s offer of legally required severance pay, provided that the employee signs a full and final release, mitigate against an award of punitive damages if the employer later refuses to pay that legally required severance pay? Surprising as it may seem, in the case of Wyllie v Larche, 2015 ONSC 4747, the Honourable Justice David Price of the Ontario Superior Court of Justice said “yes, it does.”

Court Finds the Phrase “Any Amounts Paid” to be Fatally Ambiguous

In the perhaps never-ending battle between employers and employees with respect to the issue of the enforceability of employment contracts, score another victory for employees and their position that employment contracts must be crystal clear before the courts will uphold them.

In the case of Howard v Benson Group, 2015 ONSC 2638 (CanLII) the Honourable Justice A. Donald K. MacKenzie found the following contractual provision to be null and void and therefore legally unenforceable:

[8.1] Employment may be terminated at any time by the Employer and any amounts paid to the Employee shall be in accordance with the Employment Standards Act of Ontario. [sic]

Judge says 30-Day Notice Provision is Okay

For years this blog has taken the position that if a termination provision in an employment contract does not technically violate the provisions of the Ontario Employment Standards Act, 2000 at the time of termination, but has the potential to do so at other times, it is legally unenforceable at all times. Period. For my earlier commentary on this subject see Poorly Drafted Employment Agreement Proves Costly.

The position and statement of law is premised upon a decision made by the Honourable Justice Wailan Low of the Ontario Superior Court of Justice: Wright v. The Young and Rubicam Group of Companies (Wunderman), 2011 ONSC 4720 (CanLII).

A more recent decision from the same court, this time authored by the Honourable Justice David Price, Ford v. Keegan, 2014 ONSC 4989 (released August 28, 2014) specifically rejects Justice Low’s decision on this point.

Independent Contractors and Employees on Contract – Understanding the Semantics of Ontario Employment Law

The modern English language is a powerful tool. However, it also has its challenges; synonyms, homonyms, and inexplicable exceptions to rules. (For example, try explaining to someone why the plural of moose is moose, goose is geese, and mouse is mice.) In the employment law context, the word that is most often the source of confusion and consternation is “contract.”

The purpose of this post is to look at the differences between:

• A contractor and an independent contractor
• Working on contract and working under a contract

Those terms often get commingled in everyday conversation, leading to incorrect assumptions and the aforementioned confusion and frustration. Therefore, as best as one can, given the limitations of the written word, here is a summary of the ways in which the law uses “contract.”