Understanding the Employment Standards Act: Termination, Notice, and Wrongful Dismissal
The Employment Standards Act and Employee Expectations
The Employment Standards Act, 2000 (ESA) sets the foundation for employee rights in Ontario. Employees typically expect their employment to continue indefinitely, barring “just cause” for termination. When termination occurs, employees should receive proper notice that complies with legal standards. This expectation is rooted in the principle of employment security, which is fundamental to Canadian labor law.
Proper Notice: Contractual Terms vs. ESA Minimums
Proper notice can be stipulated within the employment contract, provided it meets or exceeds the minimum standards set out in the Employment Standards Act. However, if the contract doesn’t specify notice periods or if the terms are unenforceable, the common law principles come into play. It’s crucial for both employers and employees to understand that the ESA provides only the minimum requirements, and common law often provides for more generous notice periods.
The Role of Bardal Factors
In the absence of specific contractual terms, proper notice is determined based on what’s reasonable within the relevant circumstances. This assessment often relies on “Bardal Factors,” stemming from the 1960 decision in Bardal v. Globe & Mail Ltd. These factors include:
- The character of the employment
- Length of service
- Age of the employee
- Availability of similar employment
These factors contribute to calculating the pay-in-lieu of proper notice owed to the terminated employee under common law. It’s important to note that courts may consider additional factors depending on the specific circumstances of each case.
Wrongful Dismissal: When Proper Notice is Not Given
Wrongful dismissal occurs when an employee is terminated without proper notice or without proper pay-in-lieu of notice. This is often the crux of employment disputes. Employers can mitigate risks by ensuring their employment contracts have termination clauses that are consistent with the ESA, thereby precluding the need for litigation and consideration of Bardal Factors. However, even with such clauses, employers must be cautious about how they implement terminations to avoid claims of bad faith or punitive damages.
The Reality of Employment Contracts
Unfortunately, many employment contracts are not ESA compliant or contain unenforceable termination clauses. When an employment contract’s termination terms are unenforceable, the employee may be entitled to a common law award significantly higher than the ESA minimums. This discrepancy can result in substantial unexpected costs for employers and potential windfalls for employees.
The Importance of Legal Counsel for Terminated Employees
Recently terminated employees are often wise to seek legal counsel before accepting a termination or severance package or signing any employment-ending waivers. By consulting with a lawyer, employees are less likely to leave money on the table that they could rightfully claim. Legal counsel can also help employees understand their rights regarding severance pay, benefits continuation, and other post-employment entitlements.
The Waksdale Decision: A Game-Changer in Wrongful Dismissal Cases
The 2020 Ontario Court of Appeal decision in Waksdale v. Swegon North America Inc. has significantly impacted how courts interpret employment contracts. In this case, Benjamin Waksdale, terminated after only 8 months of employment, was initially offered two weeks’ pay in lieu of notice. He sued for six months’ pay and ultimately settled for five months’ pay – almost 11 times the original offer. This case underscores the importance of carefully drafted employment contracts and the potential consequences of non-compliance with the ESA.
Key Takeaways from Waksdale
The court’s decision in Waksdale established several important principles:
- Employment contracts must be interpreted as a whole, not piecemeal.
- If any part of the termination provisions violates the ESA, the entire termination scheme may be struck down.
- Courts will not enforce termination provisions that are in whole or in part illegal.
This decision means that even if the “without cause” termination clause in a contract is ESA compliant, the entire termination scheme could be unenforceable if the “with cause” clause breaches the ESA. This holistic approach to contract interpretation has far-reaching implications for both employers and employees.
Implications of Waksdale for Employees and Employers
The Waksdale decision has far-reaching implications:
For Employees
Terminated employees should seek legal counsel to review their employment contracts. A non-ESA compliant contract could result in termination or severance pay significantly higher than what the employer initially offers – potentially ten times more or even greater. This decision has effectively strengthened the position of employees in negotiating severance packages.
For Employers
Employers should have their contracts reviewed to assess potential liability in the event of employee termination. The Waksdale decision has rendered many pre-existing contracts vulnerable to challenge. Employers may need to update their employment contracts and termination policies to ensure compliance with both the ESA and the principles established in Waksdale.
Understanding Your Rights Under the Employment Standards Act
The Employment Standards Act provides crucial protections for employees, particularly in termination scenarios. However, the interplay between the ESA, employment contracts, and common law principles is complex. Both employees and employers must be aware of their rights and obligations to navigate these waters effectively. Regular review and updates of employment policies and contracts are essential to stay compliant with evolving legal interpretations.
Need Help Understanding the Employment Standards Act and Your Rights?
Given the complexities surrounding termination, proper notice, and the impact of recent court decisions like Waksdale, it’s crucial to seek expert guidance.
Daniel English, an experienced employment law specialist can assist you with:
- Reviewing employment contracts for ESA compliance
- Assessing termination packages and severance offers
- Explaining the implications of the Waksdale decision for your specific situation
- Guiding employers in updating their employment contracts
- Representing employees in wrongful dismissal claims
- Advising on workplace policies and procedures to ensure ESA compliance
- Providing guidance on employee rights and employer obligations during the COVID-19 pandemic
Whether you’re an employee facing termination or an employer looking to ensure compliance, understanding the Employment Standards Act and recent legal developments is crucial. Don’t hesitate to reach out for professional advice to protect your rights and interests in these complex matters surrounding the Employment Standards Act.
Have More Questions on the Employment Standards Act? Contact Daniel English Now
If you have any further questions about employment law, the Employment Standards Act, or how recent decisions like Waksdale might affect your situation, don’t hesitate to reach out. Daniel English, our experienced employment law paralegal, is here to help.
Visit Daniel’s profile page to learn more about his expertise and how he can help with your specific employment law concerns or other paralegal services.
Don’t let uncertainty about your employment rights cost you. Schedule a consultation with Daniel English today and get the professional guidance you need to navigate the complexities of employment law.
