Employment Law Law is the area of the law that governs the relationship between the employer and its employees in the non-union context. Although many people believe that employment law stems only from the applicable provincial or federal employment standards legislation, the majority of employment rights our found in the common law (judge made law). In most cases the applicable common law principles afford greater rights to an employee, particularly with respect to the right to severance pay upon termination, than what exists under the applicable provincial or federal employment standards legislation.

Termination for Just Cause


In general terms all terminations fall into two broad categories

Where an employee is terminated for "just cause" the employer terminates the employee for some form of wrong doing that is of sufficient seriousness to satisfy the requisite legal threshold, and that irreparably damages the employment relationship between the employee and employer. Many employers allege that an employee was terminated for "just cause". Despite these common allegations not all wrongdoing meets this high legal standard. As a result although employers often allege that they have "just cause" when they terminate an employee, more often than not the courts ultimately conclude that no "just cause" existed in the circumstances.

The onus rests with the employer to prove that it had just cause for termination in the particular circumstances of the case. Should the employer successfully prove that just cause existed in the circumstances it is not required to provide the dismissed employee with any notice of termination or severance pay. In these circumstances the employee may be immediately terminated without any compensation. Where an employee is dismissed for just cause he will also be unable to qualify for Employment Insurance.

Termination Without Cause


In general, in the absence of just cause an employer may terminate an employee at any time. Should the employer wish to terminate the employee in this fashion the employer is obligated to give the employee notice of the termination, or a payment in lieu of notice (severance pay). In some circumstances the right of the employee to receive severance pay will be impacted by an agreement with the employer that stipulates the employee's rights upon termination. Should this agreement be found to be enforceable the employee may be limited to the notice or severance amounts outlined in the agreement.

Working Notice


Working notice is notice by the employer to the employee that the employee's employment will terminate on a specific date in the future, or on the occurrence of a specific event. This notice period may comprise a few days, or may be extended to cover months or sometimes years. The purpose of this notice period enables the employee to search for new employment.

The length of time between the original notice and the effective termination varies from employee to employee. The length of the working notice period is dependant on a number of factors including but not limited to: the nature of the employee's employment, likelihood of re- employment, the employee's age, and the length of the employee's employment tenure with the former employer. In general terms, employees with longer periods of service with one employer are entitled to longer notice period than employees with shorter terms.

Severance Pay


The courts have acknowledged that providing an employee working notice usually does not work very well for either the employee or the employer. As such, the courts have found that the employer may, in lieu of providing working notice to the employee, terminate the employee immediately and pay the employee the remuneration (pay and benefits ) that the employee would have earned over the working notice period had it been given. This pay in lieu is commonly referred to as severance pay. Severance pay generally reflects the remuneration that the employee would have received had they been provided working notice, and is calculated using the same variables as that used to determine the length of the notice period.

Many issues arise in the determination of an employees severance amount. There are often issues with respect to the employees entitlement to: salary, commissions, bonuses, disability payments, stock options, discounted stock purchase plans and other benefits.

Constructive Dismissal


In some circumstances an employee may be entitled to a remedy against their employer where the employer made significant unilateral changes to the terms of the employment relationship. Where the employer has made significant changes the employer may have breached the terms of employment. Where this is proven to have occurred a constructive dismissal has taken place. Common examples of situations where courts have found a constructive dismissal to have taken place include unilateral changes to: salary, bonuses, commissions or commission structure, health and insurance benefits, job titles, job descriptions, positions, and duties and responsibilities.

If the employer has committed a constructive dismissal, the employee may have the right to terminate the employment and sue for severance pay.

Determining whether a constructive dismissal has occurred is a complex matter, and every employee's situation is different. Many employees who believe they have been constructively dismissed subsequently discover (after receiving legal advice or after the court rules against them) that they were not constructively dismissed. As a result employees must be cautious in acting on a perceived constructive dismissal.

If you feel that your employer has made changes to the terms of your employment that may amount to a constructive dismissal you should obtain immediate legal advice.

Duty of good faith and fair dealing


The courts have found that although an employer has a right (subject to an agreement to the contrary) to terminate an employee at any time, the employer has a duty to terminate the employee in good faith, and in a fair and even handed fashion. Where it is proven that the employer has breached this implied obligation, the court may assess a greater damage award in favour of the employee over and above the award that the employee otherwise would have received.

Non-competition and Non-solicitation Agreements


Employers regularly have their employees sign non-competition and non-solicitation agreements. These agreements come in many forms and may form separate agreements between the employer and employee, or may be inserted into the general employment agreements. No matter what form these agreements take, their significance to an employee cannot be overstated.

The consequence to an employee of an enforceable non-competition or non-solicitation agreement can severely limit an employee's future employment options should they decide to leave the employer's employment to go into business for themselves, or work for a competitor of their former employer.

An employee who leaves secure employment (giving up his severance entitlement) with the belief that their non-competition agreement is unenforceable can be met with an injunction (an order to cease work) and a law suit seeking substantial damages. Despite the merits of the law suit, the employee will be required to spend substantial funds defending the law suit.

In many cases a non -competition or non-solicitation agreement will be found to be unenforceable because it fails to satisfy the relevant legal test. Nevertheless, any employee that executes an non-competition or non-solicitation agreement faces the risk that the clause may be enforceable. Given the severity of the potential consequences of a finding that these agreements are enforceable, all employees should obtain legal advice prior to executing any such agreements.

Fiduciaries


Many employees think that once their employment ends with an employer, all their obligations to the employer cease and that they are free to compete with their former employer as they see fit. Certain employees continue to owe duties to their employer after the employment relationship ends. Usually employees who are in upper management, or are "key employees" or who due to their position make their employers peculiarly vulnerable, are restricted in competing with their employers postemployment.

Employees in a fiduciary position also owe additional duties to their employer during the employment period. The primary duty owed by fiduciaries is a duty to act solely in the best interests of the employer. Conflicts of interest and usurping corporate opportunities must be avoided.

Many different employees may be found to be in a fiduciary position. As a result all employees must obtain informed legal advice, prior to accepting new employment, or starting a competing business, to ensure that they do not inadvertently breach any potential fiduciary obligation they may owe to their current or past employer.

Conflict of Interest


During the employment relationship, employees have an obligation of good faith and fidelity owed to their employee. Putting yourself in a conflict of interest position can be grounds for an immediate termination for cause.

WARNING: The above summaries of law represent a very small portion of employment law and cannot be relied on in determining any specific employees rights or obligations and do not constitute legal advice.

If you need help with:

  • Wrongful Dismissals
  • Constructive Dismissals
  • Termination (Fired) for Cause
  • Sued by your employer
  • Workplace Advice
  • Employment Agreements
  • Assessment of Severance
  • Stock Options and P.S.U. 's
  • Bonus entitlement
  • Education/training payback agreements
  • Discrimination
  • CPP, Employment Insurance, Employment Standards
  • Disability Insurance (entitlement)
  • Fiduciary Obligations
  • Partnership Litigation
  • Theft and Fraud investigations and Charges
  • Professional Standards advice and representation
  • Non-Competition and Non-Solicitation advice

And you require knowledgeable, practical, and experienced advice.