December 31, 2020
2020 has been quite a year for employers across Canada. In addition to landmark cases which have changed the labour and employment legal landscape, employers have also had to deal with the unprecedented impact of the novel Coronavirus (COVID-19), which has brought with it a plethora of new rules, directives and legislation that has profoundly affected the Canadian workplace, and which will change the way we all work in the future. As the year ends, and as we move to what is hopefully a very different looking year, we look back on key decisions and legislative developments in labour and employment law.
1. Changes to the Law of the Enforceability of Termination Clauses
In Waksdale v. Swegon North America Inc. 2020 ONCA 391, the Court of Appeal concluded that a “just cause” termination clause in an employment agreement that was inconsistent with the “wilful misconduct” standard set out in the Ontario Employment Standards Act, 2000 (the “ESA”), was enough to void all termination language in a contract, including a separate without cause termination clause.
What this means is that where an employment agreement contains a “just cause” termination clause which doesn’t address the ESA standard for termination, it can render an otherwise enforceable “without cause” termination clause invalid. As most employers know, this will call into question the validity of many termination clauses presently found in standard employment contracts. Going into the new year employers in Ontario should review and update the termination clauses in their employment agreements, with provisions that are consistent with the Court of Appeal’s decision.
2. Employees’ Entitlement to Bonus Compensation after Termination of Employment
In a significant case impacting the payment of bonuses during any common law notice period, the Supreme Court of Canada confirmed in Matthews v Ocean Nutrition Canada Ltd. 2020 SCC 29 that, upon dismissal, employees have a common law right to all compensation they would have received had they worked through the notice period. This includes non-discretionary bonuses where employee entitlement to the bonus is triggered during the notice period. To limit an employee’s common law right to a bonus during the notice period, employers are required to use unambiguous language in their employment contracts or bonus plans.
To be unambiguous, they must “clearly cover the exact circumstances that have arisen”. Therefore, if the clause is considered to be ambiguous it will be ineffective in limiting employee bonus entitlements that accrue during the reasonable notice period. Employers should consider seeking legal advice to draft bonus clauses that attempt to remove an employee’s common law right to their bonus during any period of reasonable notice following the termination of their employment.
3. COVID-19 Overview
On March 17, 2020 Premier Doug Ford declared a state of emergency in Ontario. By March 23, 2020 the Ontario government announced the closure of all non-essential businesses. Since that date there have been various notable shifts in legislation as the nation seeks to stop the spread of COVID-19. Notably on April 30, 2020 the Ontario government released 65 new safety guidelines for businesses as we moved towards re-opening. Our firm wrote about the new guidelines here.
On May 29, 2020, the Government of Ontario passed Regulation 228/20 the Infectious Disease Emergency Leave (“the Regulation”) under the ESA to provide employers with temporary relief from certain of the ESA’s deemed termination provisions where their operations slowed or halted due to COVID-19. This Regulation exempts employers from ESA notice or severance pay obligations regarding any qualifying non-unionized employees, who, would have otherwise been deemed terminated by the ESA, if they were laid off for longer than what is statutorily permitted. The Ontario Government recently passed a further regulation to extend the COVID-19 period to July 3, 2021. For more information, we wrote about it here.
On July 24, 2020, the Reopening Ontario (A Flexible Response to COVID-19), Act, 2020 (“the Act”) came into force. Under the Act the Ontario government has the power to issue emergency orders in response to COVID-19. There have been a number of regulations invoked under the Act which affect employers in certain industries. The regulations provide rules and practices for workplaces, staffing, redeployment plans, among other things. Employers should be aware and seek advice on how these regulations have impacted, and may continue to impact their business.
On December 21, 2020 Ontario Premier Doug Ford announced that Ontario will enter lockdown beginning on Boxing Day. This means all non-essential business must close. For Southern Ontario this lockdown is projected to last until January 23, 2021, while the lockdown in northern Ontario is projected to last until January 9, 2021.
As a result, if employers have not already, they need to ensure they have Work From Home Agreements or arrangements put in place. Importantly, employers must be certain they continue to abide by all the rules and regulations that would normally apply if the employee was attending the physical workplace. Employers may also want to consider what their position may be if an employee requests to work from a location outside of where the employer is located.
All workplaces are still required to screen workers and essential visitors for COVID-19 before they enter the work environment. This was mandated in the Ontario Regulation 364/20: Rules for Areas in Stage 3, which states that all workplaces are required to comply with the recommendations issued by the Office of the Chief Medical Officer of Health on screening individuals. The Ministry of Health’s recommendations and COVID-19 screening tool can be found here. The screening tool applies to most provincially regulated workplaces. Workplaces where screening measures are already regulated are excluded from having to use the screening tool (ex: health care facilities and congregate living settings).
The Ontario government continues to provide relief for businesses during the pandemic. Some forms of relief being provided are:
- The new Ontario Small Business Support Grant will provide up to $20,000 to eligible small business owners.
- Bill C-9 which came into effect on November 19, 2020 extends the Canada Emergency Wage Subsidy (CEWS) until June 2021. Under the new legislation, any business with a revenue decline will be eligible. The subsidy will be proportional to the revenue drop, to a maximum of 65 per cent of eligible wages.
- Additionally, the Canadian government’s Lockdown Support provides funds to organizations that have had to close or significantly restrict their business as a result of mandated public health orders. This support is available retroactively from September 17, 2020 to June 2021. Businesses forced to close will be eligible for a 25-per-cent top-up on the CEWS base subsidy rate.
4. COVID-19 Vaccine
With the approval of two (2) vaccines for COVID-19 in Canada, the issue of whether employers may be permitted to compel their employees to be vaccinated in order to work in its facility will be of concern to many employers. In addition to the collective agreement issues which arise in unionized work environments, employee safety, privacy and human rights questions are manifest. Vaccination cases in the health care sector have identified issues which could trigger rights under the Canadian Charter of Rights and Freedoms as employees may refuse to be vaccinated on the basis of their individual rights and liberties.
The main issue for employers involves the employer’s obligation to maintain the safety of its workplace, which may take precedence over the employee’s individual rights and liberties. It is to be expected the vast majority of employees will willingly proceed with the vaccination. Employers should consider the implementation of a reasonable policy providing for mandatory vaccination in order to maintain the orderly performance of work within the facility, as well as setting up a process for review and possible accommodation for those who may not agree to be vaccinated.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.