The world of employment law is often more complicated than a lot of people expect. It is common that certain employment law “facts” that both employers and employees alike take for granted are actually not true. This blog debunks 5 common employment law myths that we see all the time as employment lawyers in Ontario.
1. Employers Can Only Fire an Employee “For Cause.”
No. An employee being “fired” or “let go” or “dismissed” or “terminated” from their employment is a common occurrence and can happen to any employee in Ontario and being fired does not mean that the employee was fired “for cause.” Sometimes the employee is advised by their employer that their job has been “eliminated” or “restructured.” These terms all mean the same thing, and it is simply that the employee has lost their job.
The main difference between a “for cause” termination and a “without cause” termination is in cases of termination “without cause” there are no allegations of wrongdoing or misconduct on the part of the employee, and as such, they are owed proper notice of termination. However, in both cases, the possibility of wrongful dismissal exists. Wrongful dismissal occurs in circumstances of a termination without cause, and the employer has refused or failed to provide the employee with proper reasonable notice of termination or pay in lieu of that notice of termination or a combination of both.
For more information about these important employment law topics, please review:
- 3 Key Things to Know About Termination Without Cause in Ontario
- Fired for Cause in Ontario? Just Cause vs. Willful Misconduct
2. Employment Contracts Are ALWAYS Enforceable.
Employment contracts are not always enforceable. The terms and obligations of any employment agreement or employment contract in Ontario related to provincial employees is subject to Ontario’s Employment Standards Act, 2000 (“ESA”) and various legal principles. The ESA sets out certain minimum employment entitlements that employers are bound by and cannot use an employment agreement to contract out of those minimum entitlements. Examples of minimum employment entitlements set out in the ESA are minimum wage, overtime pay, holiday pay, vacation pay or notice of termination. The employer may provide a greater benefit than the minimum entitlement(s) under the ESA, but it cannot provide less than what is set out in the ESA.
For example, one of the most contentious clauses that are found in employment agreements is the termination clause. A termination clause in an employment contract or employment agreement sets out how an employee will be terminated or fired and what entitlements to notice of termination or termination pay that employee has upon termination. Employers often seek to limit an employee’s entitlement to notice of termination to the statutory minimum entitlements to notice as set out to those set out in the ESA via the termination clause. This means that the employer will try to reduce the notice period owed to the employee to only what is set out in the ESA and eliminate what could be owed to the employee under the common law. The case law on what can constitute an enforceable termination clause changes commonly in Ontario. There have been numerous decisions on the subject matter in which termination clauses have been closely scrutinized by the courts.
For more information about the enforceability of employment contracts, please see:
- Signing a New Employment Contract? Making Changes to an Existing Employment Agreement? Learn Why “Consideration” Is Important!
- Learn Why Termination Clauses in Employment Contracts Are So Important Upon Termination
3. Employees Are Only Owed 1 Week or 1 Month of Notice Per Year of Service Upon Dismissal.
The notice period as set out in the ESA is based on years of service (which means the length of employment the employee had with the employer), and it works out to be 1 week of notice per 1 year of service up to 8 weeks.
However, the notice periods as set out in the ESA are minimum entitlements that employees have. The employee may be entitled to a longer notice of termination period under the common law. However, it is only if the employee’s employment agreement or contract does not contain an enforceable termination clause limiting the employee’s compensation to the entitlements under the ESA, that the employee may be also entitled to compensation for pay in lieu of reasonable notice at common law. The employer cannot contract out of the employee’s statutory entitlements in the ESA.
For example, under the common law, notice periods are derived through judge-made decisions based on several factors (age, length of service, character of employment and the availability of similar employment). Ontario courts will typically award an employee with pay in lieu of reasonable notice between as low as two weeks of notice and up to 24 months’ common law notice depending on the various factors we have mentioned above. In exceptional circumstances, Ontario courts will even award notice periods to dismissed employees of above 24 months.
For more information about notice periods upon dismissal, please review our blogs entitled:
- Our Guide to Notice of Termination under Ontario’s Employment Standards Act, 2000
- The Bardal Factors Explained: A Guide to Common Law Notice in Ontario
4. If An Employee Resigns, They Are Never Owed Termination or Severance Pay.
The fact is that in cases of constructive dismissal, the employee may be still owed termination and / or severance pay despite the employee having “resigned” from their employment. This is because in cases of constructive dismissal, the employee’s fundamental terms of employment are changed unilaterally by the employer. An employee’s employment will usually be impacted such that it would be unreasonable to stay in the employment relationship and accept the fundamental changes in their employment. As such, the employee will then resign from their employment. Resignations need to be freely and voluntarily provided in order for the resignation to be held by Ontario courts to be a valid resignation.
Once a claim for constructive dismissal has been made, the employee will generally claim common law and / or statutory damages in a wrongful dismissal lawsuit due to the employer failing to provide the employee with proper notice of termination or termination pay and severance pay, if applicable. Depending on the circumstances, the employee may also be entitled to punitive and general damages for discrimination, harassment or bad faith.
For further information about constructive dismissal, please look at our blogs:
- Can My Employer Change My Job Description Without My Consent?
- What Is Constructive Dismissal? A Guide for Employees
5. An Employer Can Legally Layoff Without It Being a Term in the Employment Agreement.
This is not true. Unfortunately, the term “layoff” is often confused by a lot of people both employers and employees alike. For example, commonly an employee believes that their employer has laid them off when the actual fact is that the employee was dismissed from their job.
To be clear, a layoff in the employment law context means that the employee stopped attending work for a period temporarily but remains employed. A layoff allows the employer to pause work of an employee (and this pause is without pay) without this pause of work being deemed a breach of the employment relationship (meaning termination or dismissal). However, and this where a lot of people get confused, it is not the case that an employer can legally lay off an employee from their job, even for a short time, absent an enforceable contractual term in the employment agreement. The right to legally lay off an employee is a right that is found in contract, despite there being statutory provisions about layoffs in Ontario’s ESA.
So, if an employer has “laid off” an employee but the layoff was not contractually available to that employer because it was not in the employee’s employment agreement, the layoff will not be implemented in compliance with the ESA and will not be enforced by Ontario courts. The employee in this situation was actually dismissed by the employer, and the employee is entitled to termination pay pursuant to the ESA and, perhaps, even under the common law depending on the circumstances.
For more information about layoffs, please visit our blogs entitled:
How Can Zeilikman Law Help?
Zeilikman Law routinely helps both employers and employees in all areas of employment law. We strongly encourage employers and employees alike to contact an employment lawyer like the ones at Zeilikman Law when faced with an employment law issue or questions about employment law in the workplace. Employment lawyers can assist with navigating these often-complex legal issues and help clients come to the best solution for their own situation.
For more blogs about other important employment law topics, please look at:
Zeilikman Law can be contacted at (905) 417-2227 or online here to schedule your own confidential consultation with one of our employment lawyers.
