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LAW529 Notes
Employment and Labour LAW (Toronto Metropolitan University)
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Chapter 1 – Canadian Law of Work in a Nutshell (1-6)
Chapter 39 - The Canadian Charter of Rights and Freedoms and Work (7-9)
Chapter 4 – What is Employment? (10-12)
Chapter 6 – The Job Recruitment and Hiring Process (13-14)
Chapter 21 – Introduction to Human Rights at Work (15-16)
Chapter 7 – Requirements to Create and Modify an Employment Contract (17-20)
Chapter 8 – Expressed Terms of Employment Contracts (Includes Restrictive Clauses) (21-25)
Chapter 9: Implied and Ancillary Employment Contract Terms (26-32)
Chapter 18 – Wage Regulation and Pay Equity (32-37)
Chapter 19 – Regulating Hours of Work, Time Off, and Overtime (38-40)
Chapter 26 – Privacy Law at Work (41-44)
Chapter 22 – The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination (45-49)
Chapter 23 –DEFENCES / The Bona Fide Occupational Requirement, the Duty to Accommodate, and Other
Discrimination Defences (50-56)
Prohibited Grounds of Discrimination List Per Province / Territory (57-59)
Chapter 11 – Contract Frustration (60-62)
Chapter 12 – Summary Dismissal for Cause Without Notice / Proportionality Test / What Must be Provided
for Wrongful Dismissal (63-72)
Chapter 15 – I QUIT Resignation / Employee Notice of Termination (73-75)
Chapter 10 – Terminated by an Employer with Reasonable Notice / Repudiation of Contract (76-77)
Wrongful Dismissal / BARDAL FACTORS (78-79)
Chapter 13 – “You Force Me to Quit!”: The Special Case of Constructive Dismissal (ex. unilateral change in
pay) / Implications Based on Employee Reaction (80-87)
Chapter 14 – Damages in Wrongful Dismissal Lawsuits / Duty to Mitigate Damages (88-96)
Chapter 20 – Regulating the End of Employment Contracts / Stat pay / Stat notice (97-102)
Chapter 28 - Introduction to the Collective Bargaining Regime and the Canadian Labour Movement /
Definitions / Strikes / Grievance (103-105)
Chapter 31 – The Unionization Process / Who’s excluded from union / Unfair practices / What Employer and
Union can and can’t do (106-114)
Chapter 33 / 34 – Negotiating the CBA / Strikes / Interventions (115-122)
Chapter 35 / 36 – Collective Agreement Provisions (ex. Bumping rights) / Grievance process / Discipline and
Dismissal / Factors of Bad Behaviour / Grounds for Discipline and Discharge (usually the same for individual
contract of employment) (123-131)
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Chapter 11 – Termination by Frustration
Frustration of Contract: The termination of a contract caused by an unforeseen event that renders performance of the contract
A contract that is “frustrated” comes to an end with no further obligation or liability of either party to the other, because
circumstances effectively prevent its continuation.
Prime examples of a frustrated employment contract include the employee contract when the employee dies, or a change in the
law prevents the employee from retaining his position
Contract frustration does not arise from the voluntary actions of one of the parties, from events or circumstances that should have
been reasonably foreseen (e.g., a labour dispute), or from events or circumstances that cause the job performance to be more
difficult or expensive
The contract automatically terminates as of the moment of frustration, no future obligations
Frustration is not retrospective; i.e., it does not void the contract ab initio.
The rights and obligations of the parties accrued prior to the frustration remain enforceable.
It does not allow for choice; i.e., the parties cannot elect to continue the contract.
The most controversial and problematic circumstance is an employee’s health problems that cause chronic or prolonged absence
from the workplace or future performance that is “radically different.”
Relevant Factors include:
-
Medical evidence;
The employee’s entitlement to sickness or disability benefits (this is prima facie not an unforeseen event beyond
the reasonable contemplation of the parties);
The employer’s duty to accommodate the employee under human rights legislation.
In common law regime, an employee who is dismissed without receiving the notice required by the contract is entitled to recover
monetary damages calculated based on an assumption that the employee had worked through the notice period
However, the employer is not required to provide any notice of termination in the following scenarios:
1. When the employee terminates the contract
2. When the contract is a fixed-term or fixed-task contract, as opposed to an indefinite-term contract
3. When the employee commits a fundamental breach of the contract, which the employer treats as cause for dismissal without
notice (summary dismissal)
4. When the contract is frustrated
Arguments about frustration of contract usually arise in the context of an employer who is defending a wrongful dismissal
lawsuit: the employer announces that the contract is terminated by frustration and the employee sues for wrongful dismissal,
asserting that they are entitled to receive notice of termination
The court then needs to decide if the conditions for frustration were satisfied
The “doctrine of frustration is concerned with who should bear the risk of the unforeseen events.”
When frustration exists, the burden of the risk falls on the employee, who will lose out on any contractual entitlements to which
they otherwise would have been entitled to as a consequence of losing their job
On the other hand, if the unforeseen event does not frustrate the contract, the employer shoulders the financial implications of the
termination of the contract
III. The Test for Frustration of Contract
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Frustration occurs when the law recognizes that, without default of either party, a contractual obligation has become incapable of
being performed because the circumstances in which performance is called for would render it a thing radically different from
that which was undertaken by the contract (Non haec in foedera veni – it was not this that I promised to do)
Does not occur when the reason the original contract cannot be performed is due to the voluntary actions of one of the parties
(self-induced frustration)
IV. Frustration Due to Illness or Disability
Innocent Absenteeism: An employee’s absence from work due to reasons that are not blameworthy, such as illness, disability, or
religious observance (Not cause for summary dismissal, still entitled to notice of termination)
These rules do not apply if the employee’s disability or illness frustrates the employment contract
Occurs if the evidence indicates that the medical condition is such that performance in the future will be impossible or
radically different from what was contracted for
Decision sometimes based on if the illness is permanent
Responsibility of the party alleging the frustration has occurred (usually the employer) to persuade the court
Where the evidence indicates that a disability is permanent, a finding of frustration can result, even if the employee had been
absent for only a short period of time prior to the employer announcing the end of the contract
C. Is the Duty to Accommodate a Disabled Worker a Precondition for Frustration of Contract?
The common law regime has not yet recognized a parallel requirement for accommodation to be explored as a precondition for a
finding of frustration due to disability
The job contemplated by the original contract is taken as fixed, and judges ask only whether the disability will for the foreseeable
future prevent the employee from performing it or require that the job be performed in a “radically different” manner than
originally envisioned. If so, then the contract is frustrated
The fact that the employee could return to work if the job were modified in some manner or if offered a different job has been
treated as irrelevant in the application of the doctrine of frustration
The employer’s implied prerogative to decide what job an employee will perform is left untouched by the contract law doctrine
of frustration
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Chapter 12 – Summary Dismissal: Termination for Cause Without Notice
An employer can terminate an employee’s employment contract without notice when the employee commits a serious, or
fundamental, breach of contract (summary dismissal for cause)
If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his
duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a
matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee
Implied Contract Term: A default contract term invented by common law judges and read into an employment contract when
the written terms of the contract (if any) do not address the specific issue addressed by the implied term
II. The Basic Legal Principles Applied to Summary Dismissal Cases
If the employer fails to persuade the court that it has cause for summary dismissal, the court will rule that a wrongful dismissal
has occurred and order the employer to pay damages
A. The Proportionality Test: McKinley v. BC Tel
First, the courts decide whether the evidence establishes that the employee engaged in misconduct of some sort in breach of an
implied or expressed term of the contract
In this task, the courts apply the standard of a balance of probabilities: an evidentiary standard of proof requiring evidence that
it is more likely than not that an incident occurred
Second, if the court finds that the employee breached the contract, then it assesses the seriousness of the misconduct to determine
whether summary dismissal was warranted
The courts ask whether the employee’s misconduct was so serious that the employment relationship ahs been irreparable
undermined
The courts look at all of the circumstances, including the seriousness of the misconduct and the harm to the employer’s business
interests, as well as other mitigating factors, such as the employee’s past employment record and length of service, whether there
was provocation, whether the employee was experiencing personal or physical difficulties at the time, whether the wrongful act
was premeditated and planned or just a poor spur of the moment decision, and whether the employer had ignored the misconduct
in question in the past
The employer can rely on evidence of employee misconduct learned after the decision to terminate the employee
C. Single Wrongful Acts vs. Cumulative Just Cause
A single breach of contract by an employee can meet the test for summary dismissal, but the incident must be very serious or a
wilful breach of contract
Wilful Breach of Contract: A deliberate, defiant, or premeditated violation of the requirement(s) of a contract
Cumulative Just Cause: Grounds for summary dismissal based on an accumulation of wrongful acts by an employee over a
period of time
Culminating Incident: The final breach of contract by an employee following progressive discipline that the employer relies on
to justify termination of an employee for cause
The courts have applied the cumulative just cause doctrine cautiously.
Duty to Warn: A requirement in both the common law and collective bargaining law regimes for employers to warn employees
that their behaviour or performance is unacceptable and to give them a reasonable opportunity to correct their performance,
incorporates progressive discipline
Progressive Discipline: The application in stages by employers of progressively more serious discipline to correct performance
problems
D. Employer Condonation of Employee Misconduct
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An employer that learns of an employee’s misconduct but then allows an extended period of time to pass without sanctioning the
employee may be prohibited from relying on that misconduct as the basis for summary dismissal. The courts call this
condonation of the employee’s breach of contract
Condonation: When a party that could have treated the employment contract as having been repudiated (terminated) by the other
party’s breach of the contract elects not to treat the contract as being repudiated
There is no precise amount of time that can pass between the wrongful behaviour by the employee and the termination
before a court will rule that the employer condoned the employee’s actions. The court will consider all of the
circumstances and decide whether the employer acted within a reasonable period of time
Misconduct that is condoned by the employer can still be considered if the employer later terminates the employee based on
cumulative cause, provided that the employee engages in new misconduct—a new culminating incident—after the initial
wrongful act
E. Specific Penalty Clauses in Contracts
Specific Penalty Clause: A term in a contract that defines the penalty that will result as a consequence of a specified breach of
contract by one of the parties
Provided the contract language is clear and unambiguous, the effect of a specific penalty clause would be to oust the common law
rules pertaining to cause for summary dismissal (ex. theft)
III. Common Grounds for Summary Dismissal (Just cause)
An employee may be terminated without reasonable notice, or pay in lieu, only for legal just cause.
If there is no just cause, it is a wrongful dismissal
For a wrongful dismissal, the employer must provide:
-
Minimum statutory notice (or pay in lieu) under the Employment Standards Act;
Statutory severance for certain prescribed employees under the Employment Standards Act; and
Common law reasonable notice
An exception is an employment agreement that includes a mutually agreed-to and enforceable severance provision
The onus resides with the employer to prove there was just cause to dismiss the employee.
The standard of proof the employer must satisfy is a balance of probabilities.
The employer must present evidence satisfactory to the court that it was probably justified in dismissing the employee.
There is no legally recognized middle ground (near cause) between a just cause dismissal and a wrongful dismissal.
The “near cause” doctrine reducing the reasonable notice period as a consequence of an employee’s blameworthy conduct was
rejected by the Supreme Court. (Ref. Dowling v. Halifax (City), [1998] SCC)
Whenever an employer argues as its defence in a wrongful dismissal lawsuit that it had grounds for summary dismissal, the
courts apply the proportionality test used in the MicKinley decision
-
Was the conduct of the employee or failure to perform so offensive or unacceptable that dismissal was justified?
Courts usually push for a lesser punishment than summary dismissal
Factors when considering employee misconduct:
-
Was the misconduct planned or deliberate, or an aberration?
Was there prior misconduct for which the employee had been warned or otherwise disciplined?
What is the degree or severity of the misconduct?
What is the employee’s employment profile (position, years of service, behavioural record)?
How is the misconduct assessed in the context of any known external circumstances (provocation, personal
problems)?
What was the employee’s response – denial, defiance, remorse?
Did the employer condone the misconduct?
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The misconduct must be addressed within a reasonable period of time.
In summation, the employer must prove the employee breached the employment contract, and that the breach was sufficiently
serious to undermine the employment contract
Justification for termination may arise from a single act if it is sufficiently egregious, or an accumulation of unacceptable acts.
For cumulative acts justifying termination for cause, the employer must demonstrate:
-
The employee was given clear warnings about his or her performance/behaviour;
The employee was given a reasonable opportunity to improve or correct the behaviour;
The employee failed to improve or correct the behaviour; and
The employer’s business was harmed thereby
Specific types of employee behaviour that can cause an employer to terminate the contract for cause:
A. Dishonesty and Conflict of Interest
Not every dishonest act gives the employer grounds for summary dismissal
Dismissal for just cause depends on:
-
The nature or severity of the dishonest act;
The consequences;
Whether it is an isolated act or a pattern of behaviour
Employees who work with significant autonomy and who are in positions of authority or positions requiring special trust (ex.
bank employees) are often held to a higher standard of ethical behaviour than are employees who are not in such positions
Theft and fraud are serious forms of dishonesty, and if a court finds that an employee committed premeditated theft or
deliberately schemed to defraud the employer or a customer, summary dismissal is the likely outcome
The employer must establish that the theft or dishonesty was intentional and not the result of innocent oversight or a mistaken
belief that the behaviour in question was permissible
Time Theft: When an employee falsely claims wages for time not actually worked / Lying to an employer can be cause of
summary dismissal
Whether such actions will lead to summary dismissal depends on the degree of dishonesty involved, as well as other mitigating
circumstances
Incompetence
-
Incompetence is a difficult ground for a just cause termination;
The difficulty increases with the employee’s length of service;
A single act of incompetence will rarely justify dismissal for cause;
The employer must show a fact-based, well-documented record over time of the employee’s failure to meet his or
her reasonable and known employment objectives.
B. Gross Incompetence and Safety Violations
Simply being a substandard employee is not grounds for summary dismissal
Gross Incompetence: A level of employee performance that falls far below that expected of a reasonably competent employee
A single act of incompetence can meet this standard if it is particularly egregious or constitutes a serious violation of safe work
practice that is known to the employee
The duty to warn is crucial when employers assert cause of dismissal based on cumulative incompetent performance
C. Breach of Faithful Service to the Employer
Includes a duty of faithful service to the employer and a prohibition on competing with the employer
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Breaches of these duties can give rise to summary dismissal
Courts have found cause for summary dismissal where employees secretly engaged in competition with their employer or took
secret profits from the employer by not reporting income
An employee who fails to learn policies and tunes out of warnings that their actions are a breach of policy may violate the
obligation of faithful service
D. Insubordination and Insolence
Insubordination: A breach by an employee of the implied or expressed term of an employment contract requiring the employee
to obey an employer’s orders and instructions
It is rare that a single act of insubordination will be just cause for termination;
The employer usually has to show a consistent pattern of insubordinate behaviour and evidence that the employee has not
responded after warnings to correct his or her behaviour.
A court is likely to find that an employee’s absolute refusal to perform the core functions of the job amounts to a repudiation of
the contract that demonstrates an intention by the employee to treat the contract as at an end
In that case, an employer can simply treat the contract as over and provide no notice to the employee
Short of an absolute refusal to perform the core functions of their job, not every act of employee insubordination will be grounds
for summary dismissal
For insubordination to amount to cause for summary dismissal, it must involve a serious issue, be wilful, and demonstrate a
defiant refusal to respect a clear and unambiguous order that was within the authority of the employer to make
However, even an act of wilful disobedience by an employee will not be grounds for summary dismissal if it involves a relatively
minor transgression or the employee had a reasonable excuse for not complying, such as a concern that the order was unlawful or
that complying with it could expose the employee to harm
A less serious incident of insubordination that would not alone constitute cause for dismissal may nevertheless serve as the
culminating incident warranting the dismissal of an employee who has been previously warned about their substandard
performance
Every employee must also avoid insolence
Insolence: An overt expression of defiance by an employee to the authority of the employer
Verbal abuse or insults;
May be grounds for dismissal if it is sufficiently serious or repeatedly engaged in after warnings to desist.
Usually a single act of insolence will not amount to cause of summary dismissal
It may do so when it is so egregious that it effectively destroys the possibility of the employment relationship continuing or
seriously harms the employer’s economic interests
Insolence is most likely to meet that latter standard when it occurs in front of other employees or customers and involves
profanities, as that behaviour undermines the authority of the employer
E. Harassment
Not all instances of sexual harassment are grounds for summary dismissal;
The term encompasses a wide range of inappropriate conduct;
Although the conduct may be grounds for discipline, it must attain a degree of offensiveness or repetitiveness to justify
termination for just cause.
Employees are prohibited from harassing co-workers or customers either by expressed contractual terms or by virtue of an
implied term
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Work-related sexual and racial harassment in particular are treated as serious employment offences that can give rise to cause for
summary dismissal, but other forms of harassment and bullying are also serious
Harassment is not always grounds for summary dismissal, context matters
Harassment by a person in a position of authority is more likely to justify summary dismissal, even if it is an isolated incident,
recognizing the power dynamic, the legal duty of the employer to prevent workplace harassment, and the vulnerability of the
victims
Relatively minor harassment may warrant a warning but not termination for cause, especially if evidence exists that the harassers
did not realize their behaviour was offensive and they are contrite once informed that it is
F. Violence and Threats of Violence
As with other grounds for summary dismissal, the proportionality test will be used to determine if the violence or threat of
violence is grounds for summary dismissal.
Acts of violence in the workplace are considered a serious breach of the employee’s obligations, and a single act of workplace
violence can give rise to summary dismissal
So too can threats of physical violence made against an employee or the employer
The courts will consider mitigating factors that might have contributed to the employee’s action (in addition to the proportionality
test)
A single incident of violence by an employee with an otherwise clean disciplinary record may not be cause for summary
dismissal, especially if the incident was provoked in some manner
G. Absenteeism and Lateness
The courts distinguish between “culpable absenteeism” (deliberate and without justification) and “innocent absenteeism” (e.g.,
illness or injury).
The approach is similar to that for incompetence.
For innocent absenteeism, the employer may argue contract frustration.
Innocent Absenteeism: An employee’s absence from work due to reasons that are not blameworthy, such as illness, disability, or
religious observance
Not blameworthy, an employee cannot be disciplined for this since they are not at fault
However, an employer may still terminate the contract of an employee based on the doctrine of frustration of contract is it can
demonstrate to a court that the employee has already been absent for a long period of time and the medical evidence demonstrates
that the employee is unlikely to be able to return to work in the foreseeable future
If a court finds that either of those two conditions have not been established, then it will order the employer to pay the employee
damages based on the required period of notice even though the employee was not able to work due to disability during the notice
period
Frustration of Contract: The termination of a contract caused by an unforeseen event that renders performance of the contract
impossible
Human rights statues impose a duty to accommodate on the employer as a precondition to terminating an employee for innocent
absenteeism
Duty to Accommodate: A legal requirement in human rights law to take steps to remove discriminatory barriers to employment,
including altering schedules, rules, or work patterns or changing the physical design of a workplace
When the absenteeism or lateness is unrelated to protected human rights’ grounds, the courts’ approach is similar to that which
we have already seen
As per the McKinley proportionality test, the courts consider all of the circumstances and decide if summary dismissal is a
proportional response to the employee’s absenteeism
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Most employers making a case for summary dismissal based on tardiness attempt to build a record of prior problems
accompanied by clear warnings and a reasonable opportunity for the employee to correct the problem
The approach is similar to that taken with respect to incompetence
The courts expect employers to warn employees that their tardiness is unacceptable and to clearly explain that termination will
result if the problem is not corrected
An employee who receives clear warnings that continued tardiness will result in termination and does not improve risks the court
finding cause for summary dismissal
Although being absent or late without permission is a breach of contract, a single incident of either would rarely constitute cause
for summary dismissal unless accompanied by some other form of misconduct
For example, if an employee fails to come to work in deliberate defiance of an order to do so, then this may constitute cause,
even as an isolated incident
Such defiance violates the contractual prohibition on absenteeism and also amounts to serious insubordination
Similarly, an employee who lies to the employer about the reason for an absence is violating the contractual requirement to be
honest, as well as being absent without authorization
Moreover, persistent absenteeism or lateness combined with other performance problems can together comprise cause for
summary dismissal
H. Off-Duty Conduct
The general rule is that employee conduct outside work provides no justification for summary dismissal;
An exception is where the conduct harms the reputation or business of the employer.
When the employee’s off-duty conduct potentially threatens the employer’s economic interests or the ability of the employee to
perform their job, then it becomes the employer’s business
In off-duty conduct cases, the courts assess whether a nexus (a link) exists between the employee’s behaviour and prejudice to the
employer’s legitimate business interests
The strength of that nexus can be related to the particular job in question
For example, morally questionable behaviour by a teacher or child counsellor outside of working hours may have a greater
negative impact on the employer’s interests or the employee’s capacity to perform their job than would similar behaviour by a
forklift driver
Comments made on social media can also be the basis for summary dismissal if they prejudice the employer’s economic
interests, undermine the employer’s trust and confidence in the employee, or poison the work environment
I. Inappropriate Use of Employer Technology
Employee misuse of employer-provided technology is not always grounds for summary dismissal
Viewing of p*** at work in particular exposes the employer to liability for allowing a poisoned work environment
It depends on a number of factors:
Whether the employer has a clear Internet policy that describes what is and is not permissible
Is the policy known to employees and consistently enforced by the employer? (If so and the employee keeps watching / doing
bad or irrelevant things on the computer then they are engaging in deliberate insubordination)
Employees is managerial positions are held to a higher standard, since they are responsible for policing company policies and for
setting a positive example
If no clear and explicit policy prohibiting the viewing of p*** or using computers for personal use is in place, the courts usually
require that the employee be warned before dismissal for cause will be upheld
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The requirement is especially relevant if the material viewed by the employee is, according to one judge, perfectly legal adult
p***, meaning that it is not a violation of the criminal code
J. Intoxication at Work
Questions to ask in determining if the employee’s contract can be terminated for cause:
Did the intoxication affect the ability of the employee to perform their job?
What is the nature of the job? (Does the job normally entail some drinking? Is the job supervisory?)
Was the intoxication an aberration in an otherwise stellar work record?
What was the extent of the intoxication and the employee’s behaviour while intoxicated?
Does the employee work in a safety-sensitive area and, if so, were others endangered as a consequence?
Was the employee’s performance impaired?
How does the employer usually treat intoxicated employees?
What detrimental effect does it have or could it reasonably be expected to have on the workplace?
Had the employee been previously warned that dismissal would result if he/she was intoxicated at work?
Is there a company policy on drinking during working hours?
What is the employer culture or custom in regard to drinking during working hours?
Has the employee previously been warned that termination could result if the employee reported to work intoxicated?
In addition to proving that the employee was intoxicated at work in violation of the employment contract, and that this breach of
contract was sufficiently serious to warrant summary dismissal, human rights legislation requires an employer to establish that it
has accommodated the employee’s addiction to the point of “undue hardship.”
As with the other grounds, a single instance of intoxication on the job will usually not be grounds for dismissal unless the
circumstances justify it (e.g., arguably, the intoxicated pilot who shows up ready to fly a plane)
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Chapter 15 – I Quit! Termination of the Employment Contract by the Employee
Test
The resignation must be voluntary, clear and unambiguous (When an employee does so out of a fit of anger it is not clear and not
a resignation).
Would a reasonable person conclude that the employee had quit?
The employee can retract a resignation prior to its acceptance by the employer.
With the exception of the Mass Termination provision under the ESA [s. 58], there is no statutory minimum notice of resignation.
An employee included in a mass termination notice must be provided a minimum one week’s (if employed less than two years) or
two weeks’ (if employed two years or more) written notice of resignation before the mass termination notice period expires.
Common law merely requires the employee to provide “reasonable” notice of resignation.
There are rarely any legal consequences for not doing so.
Resigning: When an employee terminates the employment contract by engaging in conduct that evinces a clear intention to
terminate the contract
When an employee wishes to resign, they usually must provide the employer with notice of termination
Wrongful Quitting: A term sometimes used to describe a lawsuit filed by an employer alleging that an employee resigned
without providing the employer with the proper amount of notice of resignation
To shield employees from forfeiting the contractual and statutory benefits in place to protect dismissed employees, the courts
have required that employees express a clear and unequivocal intention to resign from their job
It is not a resignation when an employee tells the employer that they are looking around for another job, provided that the
employee keeps performing their assigned duties in the meantime
An employee who resigns after being given an ultimatum to quit or be fired (a forced resignation) will not be found to have quit
because the resignation is not a voluntary expression of a desire to terminate the relationship
Forced Resignation: When an employer puts pressure (directly or indirectly) on an employee to resign or face being fired
Even when a frustrated employee utters something like I quit or I’m done and then storms out of the workplace, courts have rules
that the employee did not resign
Employers are expected to pause and allow the employee to cool down before jumping to the conclusion that the employee
intended to terminate the employment relationship
If an employee expresses a clear intention to resign and then acts consistent with that intention, a court will find that the
employee has resigned
So an employee who steadfastly (firmly) refused to report to a new job assignment was found to have resigned, since it was
within the employer’s contractual rights to reassign the employee
Even when judges find that the employee intended to resign, they have sometimes permitted the employee to change their mine
(resile from their resignation), provided that the employer has not yet informed the employee that the resignation is accepted OR
acted on the resignation to its detriment, such as, for example, by hiring a replacement
The fact that employees who appear to have resigned might be found not to have done so, and that courts permit employees to
change their minds, places employers in a difficult position
If the employer treats the employee as having resigned and refuses the employee the right to return to work, it could be found
liable for wrongful dismissal if a court later finds that the employee had not resigned
III. The Requirement for an Employee to Give an Employer Notice of Termination
Employees are required to provide reasonable notice of termination
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There are important differences between the rules that govern employee and employer reasonable notice
The requirement for an employee to give notice to terminate an employment contract does not appear in employment standards
legislation in every Canadian jurisdiction (only Alberta, Saskatchewan, Nova Scotia, Newfoundland and Labrador, and Manitoba)
Every jurisdiction in Canada requires employers to provide notice to employees
Where there is no statutory requirement for employees to give notice of termination, the amount of notice required depends solely
on what the contract requires
Failure by the employee to comply with this term would result in a breach of contract, possibly entitling the employer to damages
If no contract term exists requiring the employee to give notice to terminate the contract, then the courts imply a term requiring
reasonable notice of termination
The manner in which judges assess the amount of reasonable notice required differs for employees
It is important for employers to be given an opportunity to find a replacement, which is often short
Reasonable notice from an employee to an employer is usually shorter than reasonable notice from an employer to an employee
If an employee gives reasonable notice of resignation effective at some date in the future and the employer responds by telling the
employee to leave immediately, the quit is transformed into a dismissal
In this case, the employer must give the employee reasonable notice of termination, which is equal to the time remaining until the
employee’s original notice of resignation would have expired
IV. Calculating Damages When an Employee Fails to Give Proper Notice of Termination
Damages are assessed based on the actual harm caused to the employer as a result of lack of notice, and not the harm incurred
due to the decision of the employee to leave
For example, an employer will need to recruit and train a new employee no matter what, so these costs cannot usually be
attributed to a failure to give notice
The recoverable damages flowing from a breach of an employee’s duty to give notice could include those resulting from the
employer’s sudden loss of the employee’s production during the notice period until such time as a replacement is hired, and other
costs that an employer incurs directly as a result of the failure to give notice
For example, if the sudden departure of an employee requires the employer to pay a temporary placement agency a fee to quickly
send over a “temp” worker, or to temporarily transfer an existing employee from another location, then that cost could be
recoverable. Had the employee given notice, the employer may not have incurred those expenses
In practice, the damages employers incur as a result of an employee’s failure to provide notice of resignation are usually so small
that employers do not bother to sue the employee
The cost of bringing the lawsuit and paying lawyers may be greater than the amount the employer will recover in damages. Or, as
demonstrated in the decision discussed in Box 15.3, the savings from not having to pay the employee’s wages during the notice
period may offset any losses from the employee’s failure to provide notice, in which case the court will not order any damages to
be paid at all. This reality explains why employers bring far fewer wrongful quitting lawsuits against employees than employees
bring wrongful dismissal lawsuits against employers
However, it makes sense for an employer to sue an employee if they lost a large amount of money (Ex. quitting and not allowing
a major transaction to process if you are a major stakeholder in it)
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Chapter 10 – Terminated by an Employer with “Reasonable Notice”
Introduction
Employers can terminate contracts at any time by giving the employee notice of termination (exception fixed-term / fixed-task)
Notice can be working notice (employee just keeps working until the notice period is over) or pay “in lieu of notice” (the
employee goes home and the employer pays the employee what they would have earned had they kept working)
Many employment contracts include no notice of termination clause, or they include a notice clause that is ruled to be unlawful
by the courts
In these cases, the courts imply a term requiring “reasonable notice” of termination of the employment contract
II. Employee Vulnerability and the Rule’s Governing Termination of Employment Contracts
The legal rules that apply to the termination of employment contracts are derived from the rules of contract law more generally
Contract law concepts (ex. Repudiation of contract) are important
Repudiation of Contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and
to no longer be bound by the contract
III. A Brief History of the Origins of Implied Reasonable Notice
At Will Employment Contract: An employment contract in which either party may terminate the contract at any time, for any
or no reason, with no notice to the other party. This is the default model in the United States. In Canada, employment standards
legislation requires notice of termination and therefore prohibits at will contract for employees covered by the legislation
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IV. How Modern Canadian Courts Assess an Employer’s Duty to Provide Reasonable Notice of Termination
Wrongful Dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their
contract without complying with the implied term in the contract requiring “reasonable notice”
The court of appeal is saying here that the requirement to provide reasonable notice is a contract term implied “in fact” (see
Chapter 9). On this approach, judges must (metaphorically) hop in a time machine and go back to the time of the formation of the
contract to ask what the parties would have agreed to had they bothered to write down a term explaining how much notice should
be given to the other party in the event of a termination of the contract. Judges still sometimes refer to the supposed intentions of
the parties when they determine the amount of reasonable notice.
Wrongful Dismissal
Statutory and common law consequences arise from a wrongful dismissal.
An implied term of the employment contract is to provide the wrongfully dismissed employee with “reasonable notice” or
payment in lieu.
The critical concepts of “just cause” and “reasonable notice” are determined by judicial precedent (common law)
The onus is on the employer to prove, on a balance of probabilities, that it had legal just cause to terminate the employee.
Courts are generally reluctant to find just cause.
Termination for just cause
-
The employer has no liability.
Termination from contract frustration
-
The employer has no liability.
Termination motivated by a prohibited ground of discrimination
-
The employer has liability under the Human Rights Code.
Termination without just cause
-
The employer has liability under the Employment Standards Act (minimum notice or pay in lieu and, perhaps,
statutory severance) and at common law (reasonable notice or pay in lieu).
The Bardal Factors
At common law, an employee in Ontario who is terminated without just cause is entitled to:
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-
Common law reasonable notice or payment in lieu, unless there is an enforceable agreement for a prescribed
severance payment;
In all instances, at least minimum notice and, perhaps, statutory severance under the ESA
The operative legal principle is that the older you are, the longer your period of employment, the more senior your employment
position, and the more difficult the employment environment, the greater the notice (or payment in lieu) you should receive for
the termination of your employment
1. Length of Service
- More notice of longer service
2. Age of Employee
- More notice if older
3. Character of the Employment
- More notice if more unique
4. Availability of Similar Employment
- More notice if less employment
There is no ceiling on the reasonable notice period.
C. Other Factors Affecting the Length of Reasonable Notice
Inducement: A factor considered in assessing the length of reasonable notice that should be awarded to an employee whose
employment contract is terminated by employer A encouraged or enticed the employee to quit a prior job with company B to
come to work for employer A
Inducement may justify a longer notice period when the employee’s decision to quit a secure job is accompanied by expectations
of future job security that do not turn out to be accurate and that can be attributed to words or conduct of the recruiting company
Chapter 13 – “You Forced Me to Quit!”: The Special Case of Constructive Dismissal
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The question of whether an employee must tolerate a unilateral change in working conditions is at the core of the law of
constructive dismissal
Constructive Dismissal: A unilateral and fundamental change to an employment contract by an employer that an employee may
treat as an effective termination of the contract
•
It is determined objectively by the facts and not in accordance with the perception of either party
Since a constructive dismissal results in the termination of the employee’s employment contract, the employee can recover
damages based on the failure of the employer to provide notice of termination
Constructive dismissal is a special type of wrongful dismissal
II. The Legal Concept of “Constructive Dismissal”
Based on the doctrine of repudiation of contract
Repudiation of Contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and
to no longer be bound by the contract
Usually this behaviour involves a substantial (sometimes called fundamental or repudiatory) breach of an essential term of the
contract, but sometimes an intention to no longer be bound by a contract can be demonstrated by a pattern of behaviour that
overall demonstrates this intention
The innocent party can elect to treat the contract as having been terminated, which entitled that party to damages for any loss
resulting from that termination
In the case of constructive dismissal, the employer’s repudiatory conduct does not automatically bring the contract to an end
A constructive dismissal occurs only when the employee accepts an employer’s repudiation of contact by quitting and suing or
constructive dismissal
Acceptance of an employer’s repudiation of contract: When an employee responds to a repudiation of the employment
contract by the employer by treating the contract as over and quitting
It does not mean that the employee accepts the employer’s behaviour. Instead, it means that the employee is accepting that the
employer has terminated the employment contract
The onus is on the employee to prove that a constructive dismissal has occurred
Often the constructive dismissal results from a single, substantial breach of contract by the employer
However, just as an employer may rely on an accumulation of wrongful acts by the employee to justify summary dismissal, so
too can constructive dismissal be based on the cumulative effect of less serious breaches of contract by an employer (called
cumulative effect constructive dismissal)
In a 2015 decision called Potter v. New Brunswick Legal Aid Services, the Supreme Court of Canada recognized two types (or
branches) of constructive dismissal:
1. Constructive dismissal based on employer behaviour that may not breach a term of the contract but that makes continued
employment “intolerable.”
2. Constructive dismissal based on substantial breach of an essential term of the contract. Most cases are decided applying the
second branch of constructive dismissal. Let’s consider each branch separately
Most cases are decided applying the second branch of constructive dismissal
A. Constructive Dismissal Based on Employer Behaviour That May Not Breach a Term of the Contract but That Makes
Continued Employment Intolerable
Objective Test: Asks whether a reasonable employee in the circumstances would conclude that the employer no longer intended
to be bound by the contract by making the employee’s continued employment intolerable
Ex. harassment and false allegations against an employee spanning 6 months can mean constructive dismissal
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B. Constructive Dismissal on Substantial Breach of an Essential Term of the Contract
Most constructive dismissal decisions apply the second branch of the test, which requires the courts to answer three questions:
1. What are the express and implied terms of the contract, and did the employer breach one of those terms?
2. If the employer breached a contract term, then was that breach “substantial” and detrimental to the employee? In answering
this question, the courts again apply an “objective test” and ask whether a “reasonable employee” in the employee’s
circumstances would conclude that the employer’s breach of contract has substantially altered an essential term of the contract
3. Did the employee “accept” the repudiation and treat the breach as having terminated the contract?
Many constructive dismissal cases turn on how the court answers the second question
A relatively minor breach of contract by an employer will not be sufficient to repudiate the contract as a whole
An employee who treats a non-substantial breach of contract (i.e., a less serious breach that does not demonstrate an intention to
treat the contract as at an end) by the employer as a constructive dismissal has simply resigned
An employee must elect whether to accept the repudiation within a reasonable period of time
If the employee does not, then the court may rule that they have condoned the employer’s breach, the consequence of which is
that an action for constructive dismissal would be barred
III. Common Scenarios That Give Rise to a Constructive Dismissal
-
Material reduction in compensation; (Ref. Box 13.2)
Material change in duties;
Change in work location (was it an express or reasonably implied term of the employment contract?);
Unpaid suspensions and temporary layoffs (was it an express or implied term of the employment contract?); (Ref.
Box 13.5)
Untenable work environment (did the employer breach its implied obligation to treat the employee with decency,
civility, respect and dignity?).
A. Changes to an Employee’s Compensation and Benefits
Any significant reduction in an employee’s pay that is not accepted by an employee will amount to a fundamental breach of the
employment contract, giving the employee the right to quit and claim damages for constructive dismissal
The question that arises is whether the pay cut is substantial enough to amount to a fundamental breach, as opposed to a nonfundamental breach
A unilateral cut to an employee’s base pay of 15% or more will almost certainly constitute a substantial breach of the
employment contract, which the employee can treat as a constructive dismissal
Lower pay cuts depend more on circumstances that surround the change (Ex. if the employer was in serious difficulty)
In contrast a 10% pay cut combined with other changes to a sales employee’s territory could be a constructive dismissal
When the cut is to the employee’s base pay, as opposed to supplemental benefits (Ex. health care or vacation time) or variable
pay (ex. discretionary bonus) it is more likely to be considered a fundamental breach
An employer who says, “I will not pay you the base wage rate we agreed upon” is considered to be expressing the sentiment that
it no longer intends to abide by an essential term of the contract
Variable pay, on the other hand, is expected to fluctuate, and the courts have long implied the right of employers to make
relatively minor changes to supplemental benefits
However, non-payment of a bonus that the employee had earned and that would reasonably be expected based on the contract and
past practice can still amount of a constructive dismissal
B. Changes to an Employee’s Job Assignment
Constructive dismissal lawsuits arise when the employee does not accept the move and instead elects to quit
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First question courts must consider is whether the contract confers a right on the employer to unilaterally reassign the employee
Even if there is no expressed right, it could be implied
Employers have an implied right to make reasonable reassignments and to shuffle job tasks
Per Ontario Court of Appeal, an employee has no vested right in the particular job initially given to him. If the employer acted in
good faith and in the protection of its own business interests, the plaintiff would have no right to refuse the transfer
Implied right of an employer to reassign job tasks is not unlimited
Courts imposed a reasonableness requirement on this right
Three factors:
The reassignment must be made for good-faith business reasons, and not as a guise to force the employee to quit
2. The reassignment or change in duties must be relatively minor, involve skills within the employee’s general capabilities, and
not amount to a fundamental shift in the type of work the employee was hired to perform. The more substantial the change in
duties, the more likely a court will find it amounted to a fundamental breach of contract
3. If the reassignment results in a demotion, then it is far more likely to constitute a constructive dismissal
A demotion involves a reassignment to a less prestigious job with less responsibility and often, though not necessarily, less pay.
In Farber, the Supreme Court of Canada observed that the courts have often held that a demotion “is a substantial change to the
essential terms of an employment contract that warrants a finding that the employee has been constructively dismissed.”
Usually a demotion will justify a finding of constructive dismissal, unless an expressed contractual right is given to the employer
to demote or the demotion is very minor or temporary
In contrast, a lateral transfer or promotion, even in the face of an objection from the employee, will usually not be treated by the
courts as a constructive dismissal
C. Reassignment of an Employee to a Different Work Location
Treated in a similar manner to a reassignment of job duties
Courts begin by asking whether an expressed contract term exists permitting the employer to transfer the employee to a new
location
If so, then that term will govern the transfer
If a contract very clearly provides that the employee will remain in one location, then a transfer out of that location would
constitute a fundamental breach of contract
Absent an expressed contractual right for employers to relocate employees, the courts consider whether an implied right exists
governing relocation
The courts have struck a balance and implied a right for employers to require reasonable geographical relocations, and depends
on a number of factors:
1. Relocation must be based on legitimate business reasons and not intended to punish the employee or drive them to quit
2. If the job in the new location would involve a demotion or a pay cut, then it is more likely to amount to a constructive
dismissal, for the reasons discussed above
3. If the job is of a sort in which geographical transfers are common and expected, then it is more likely a court will find the right
to relocate is implied in the contract
Thus, executives employed by companies with multiple locations and in jobs and industries where mobility is common are often
assumed to have agreed that the employer may relocate them
In some, case the courts have found relocations to be unreasonable, and therefore a fundamental breach of contract, when the
move would impose a serious hardship on the employee’s economic or family life
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D. “Don’t Come to Work!”: Unpaid Disciplinary Suspensions, Temporary Layoffs, and Administrative Leaves or
Suspensions
In these circumstances, the question arises whether the employer is contractually permitted to refuse an employee the right to
perform their job
Canadian courts have rules that, absent an expressed or implied term in the contract permitting layoffs, a layoff of an employee is
a breach of contract that an employee may treat as a constructive dismissal
At common law, an employer has no right to kay off an employee. Absent an agreement to the contrary, a unilateral layoff by an
employer is a substantial change in the employee’s employment and would be a constructive dismissal
Employer could avoid constructive dismissal by including an expressed contract term permitting temporary layoffs, which is
common in the case of collective agreements in unionized workplaces, but relatively few non-union employment contracts
include layoff terms
Some Canadian courts have found that a short paid suspension for performance-related concerns do not give rise to grounds for a
constructive dismissal
However, an unpaid disciplinary suspension of an employee will usually amount to constructive dismissal if the employee refuses
to accept it
Unpaid suspension is only permitted in two situations:
First, the contract could include an expressed or implied contractual right for the employee to be suspended without pay
An implied right to suspend could be based on a history of the employer issuing unpaid suspensions that is well known and
accepted by the employee
Second, if the employee’s misconduct leading to the suspension was serious enough to justify summary dismissal for cause, then
the employer may be permitted to opt instead to apply unpaid suspension, which is a lesser form of discipline
Thus, if the employer defends a constructive dismissal lawsuit based on an unpaid suspension by arguing that it had cause for
summary dismissal, the court must consider the law of summary dismissal
Administrative Leave: A period of time during which an employer refuses an employee the right to report to work for reasons
other than a lack of work (ex. layoff) or discipline (ex. a suspension), usually during the period of an ongoing investigation into
possible employee misconduct
In these cases, courts have rules that an employer may temporarily place an employee on leave until the investigation concludes,
but only if (1) there is a nexus between the allegations against the employee and the employer’s business interests and (2) the
leave is with pay
In its recent decision in Potter v. New Brunswick Legal Aid Services Commission, mentioned earlier in the chapter, the Supreme
Court of Canada considered whether an employer constructively dismissed an employee by placing the employee on a paid
“administrative suspension” while it attempted to bargain a buyout of the employee’s fixed-term contract
The court ruled that an employer has an implied right to place an employee on paid administrative leave if it does so in good
faith, and the suspension is both “reasonable and justified” in the circumstances
The court ruled that the suspension of Potter failed to meet this standard because the employer failed to communicate honestly
with the employee about the reason for the suspension and was also secretly exploring whether they could terminate Potter for
cause
E. Employee Harassment or a Poisoned Work Environment
An employee subjected to serious workplace harassment that violated the implied contract term requiring employers to treat their
employees with decency, civility, respect, and dignity could quit and sue for constructive dismissal
Courts have also recently found that harassment or unfair treatment of an employee can lead to a constructive dismissal finding if
the court rules that a reasonable employee would conclude that the employer’s behaviour has made the workplace intolerable for
the employee, even if the court does not rely on a breach of any particular contract term
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Harassment or bullying by an employer can result in a constructive dismissal finding applying either of the branches of
constructive dismissal
Not every little criticism or negative comment by an employer will be enough to establish a constructive dismissal
The threshold must be high enough to permit legitimate expressions of concerns and frustration by an employer
A court is most likely to find a constructive dismissal when a representative of management engaged in the harassment or the
employer failed to take steps to investigate and stop harassment by a co-worker once it became aware of it
IV. Employee Acceptance and Condonation of the Employer’s Repudiation of Contract
The employee must accept the employer’s repudiation of the employment contract within a reasonable period of time by quitting.
If not, the employee is deemed to have condoned the repudiation
The employer’s fundamental breach of contract does not itself bring the contract to an end
The employee must accept the employer’s repudiation of contract and treat the contract as at an end by quitting
When an employer commits a fundamental breach of an employment contract, the employee essentially has three options:
-
Condone the employer’s breach of contract
Accept the employer’s breach of contract, and treat the contract as terminated (constructive dismissal)
Protest the employer’s breach of contract without quitting, and insist that the employer comply with the original
contract terms
In option two presented in Box 13.6, the employee must “accept” the employer’s repudiation of contract within a reasonable time
period. If the employee does not quit within a reasonable time period, then the court may rule that the employee condoned the
breach (option one) and is therefore prohibited from treating it as a constructive dismissal
Recall that if the employer had unilaterally changed the contract terms for its own benefit, such as by reducing the employee’s
compensation, the change must still be supported by mutual consideration to be enforceable, as we learned in Chapter 7
What constitutes a reasonable period of time depends on the facts in each case, and the courts’ decisions on this point have varied
widely
For example, one court found that an employee who did not quit for 11 days after changes to his contract were made had
condoned the breach
However, most judges have provided employees with a much longer period of time to elect whether to quit
The Ontario Court of Appeal noted in one case that allowing employees a reasonable time to reflect on their decision recognizes
the vulnerability of employees and the “difficulty of making … life-altering decisions” and also “promotes stability and
harmonious relations in the workplace.”
Thus, for example, a seven-month delay before quitting was found not to amount to condonation in Tilbe v. Richmond Realty Ltd
Let’s demonstrate the three options described in Box 13.6 by considering the situation of an employee who shows up to work one
day and is informed by their employer that their pay has been cut by 50 percent
As we learned above, that change clearly amounts to a substantial breach of contract. Now consider the three options available to
the employee
First, they could condone the change by not objecting and just continue to work under the changed terms (option one)
If they do that, then they cannot later quit and allege that they were constructively dismissed by virtue of the pay cut. Second,
they could “accept” the breach of contract, quit, and sue for constructive dismissal (option two). Third, they could reject the pay
cut by clearly advising their employer that they do not agree to the change (option three), but keep working
The employer could then respond by terminating the employee’s original contract with proper notice and offer a new contract at a
lower pay rate, as we learned in Chapter 7
However, if the employer permits the employee to keep working, then that work is being performed under the terms of the
original contract
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Continuing to work does not amount to agreement to the pay cut if the employee has informed the employer that they do not
agree to the change. If the employer starts paying them the reduced rate, the employee can later sue for breach of contract to
recover any damages caused by that breach.
Chapter 14 – Damages in Wrongful Dismissal Lawsuits
Unless the employment contract expressly states otherwise, and with certain jurisdictional exceptions, the wrongfully dismissed
employee is entitled to common law reasonable notice, or payment in lieu, and at least minimum notice and, perhaps, statutory
severance under the ESA.
The courts ask what loss the employee suffered as a consequence of not receiving notice, and then order the employer to pay
damages (money) to the employee to compensate for that loss
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Damages: An amount of money a party guilty of a contract or tort violation is ordered to pay the innocent party to compensate
the person for the harm incurred
II. General Theory of Damages and Absence of “Specific Performance”
When an employer dismisses an employee without giving proper notice (and absent cause for summary dismissal), this action
repudiates the contract and the contract comes to an end
Repudiation of Contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and
to no longer be bound by the contract
Wrongful Dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their
contract without complying with the implied term in the contract requiring “reasonable notice”
Damages for breach of contract should “As far as money can do it, place the innocent party in the same position as if the contract
had been performed”
In a wrongful dismissal lawsuit, the courts assess what money and benefits employees would have received had they worked the
notice period
A court order requiring someone to perform their obligations under a contract is known as specific performance
In the context of wrongful termination of an employment contract, this remedy would mean that either the employer must reemploy a dismissed employee or the employee who quit in a manner that breached the contract must return to work
Courts rarely order specific performance of an employment contract
If one party wants the employment to end, then it will likely end as continuing it does not respect freedom of choice and respect
for human dignity *only in some situations, for example when the situation is flipped the courts do expect employees to return to
work against their wishes in the context of the duty to mitigate
The inability to obtain specific performance of an employment contract means the dismissed employees who win wrongful
dismissal lawsuits will not get their job back
Their job is gone unless the employer voluntarily decides to offer a new employment contract
III. Categories of Damages in Wrongful Dismissal Lawsuits
1. Compensatory damages (sometimes called ordinary damages)
The financial losses that flow naturally from the fact that the employee was not permitted to work the notice period
Bardal factors are applied to determine the proper length of notice, then calculate payment and benefits the employee
would have received had they worked through that period
If the employer terminates the employment contract without just cause and without giving reasonable notice of termination, the
employee is considered to have been wrongfully dismissed and is entitled to damages equal to the employee’s salary and
benefits that would have accrued during the period of notice that should have been given by the employer
Reasonable contemplation test: The test of contract damage remoteness from the 1854 case of Hadley v. Baxendale. It provides
that damages for breach of contract are available only for harms that the parties would reasonably have contemplated at the time
the contract was formed
Consider a silly example. If an employee who has just been dismissed without notice finds himself suddenly with time on his
hands and goes golfing, during which his leg is bitten off by an alligator hiding in a sand trap, he cannot recover damages for the
lost leg from the employer in a wrongful dismissal lawsuit. Although he would not have been golfing that day “but for”
his sudden and wrongful dismissal, neither party would reasonably have contemplated an alligator attack in the event that the
employer dismissed the employee without notice. We call damages that could not have been reasonably contemplated by the
parties too “remote” to be recoverable
Some losses arising from a failure of the employer to give proper notice to the employee are easily contemplated. Obviously, an
employee dismissed without notice will lose out on the wages and other benefits that would have been earned had they worked
the notice period. Provided that the employee can prove they suffered those losses, damages would be awarded to compensate the
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employee—to put the employee back into the financial position they would have been in had they worked the notice period. Lost
wages for the notice period are usually easy to calculate
If the evidence establishes that the employee would have received a raise or worked overtime at an additional rate of pay during
the notice period, then those amounts will also be included in the calculation of lost wages
An employee may also have been entitled to payments or benefits other than wages during the notice period. For example, the
value of pension contributions or pension benefits that would have been earned or accrued during the notice period is usually
recoverable
So would the value of other benefits the employee would have received during the notice period, such as vacation pay or vacation
time; a car allowance, provided that the benefit was a component of the employee’s compensation and not simply a
reimbursement of actual expenses incurred in the course of working; and the value of stock options that the employee would have
been entitled to exercise within the notice period
If the employer cancelled health, dental, and life insurance benefits coverage during the notice period, the lost value of those
benefits is recoverable in a successful wrongful dismissal case. Cancelling a dismissed employee’s benefits before the notice
period expires could prove costly for an employer. For example, if an employee becomes disabled during the notice period, but
disability insurance benefits have been cut off, the employer will be liable for the amounts the employee would have received
from the insurance company
Similarly, if a dismissed employee pays out of pocket for dental visits or other medical costs that would have been covered by the
employer’s benefits plan, the employer would be ordered to reimburse the employee for such costs. A dismissed employee with
employer-provided dental benefits should rush to the dentist and get all that expensive work done before the notice period
expires!
If a payment such as a commission or bonus was payable at the discretion of the employer, or the evidence establishes that the
employee would not have qualified for such a payment even if they had worked through the notice period, then it likely will not
be ordered by a court in the damage award
However, if the contract language or the facts confirm that the employee would have received the commission or bonus had they
worked the notice period, then that loss will also be included in the damage award.21 Box 14.2 examines the relationship with the
assessment of reasonable notice and damages for lost benefits
In short, calculating general damages arising from a wrongful dismissal requires identification of what the employee has lost by
not working through the entire notice period, and then an assessment of the financial cost of that loss
Salary
Includes any increase over the notice period, overtime pay, car allowance or commissions that normally would have been
received
Benefits
If they cannot be continued, the employer should pay for the replacement cost over the notice period.
Company vehicle
Insurance
If coverage cannot be maintained, the employee should be compensated for the purchase of replacement coverage for the notice
period.
Bonus
Not required to be included if it is granted solely at the discretion of the employer.
Stock options
Not required to be included if they are granted solely at the discretion of the employer.
Pension
Compensation is required for any loss of entitlement over the notice period
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2. Aggravated or moral damages for bad faith in the manner of dismissal
Awarded where the employer’s conduct during the dismissal itself is unfair or in bad faith, such as being untruthful, misleading or
unduly insensitive;
The employee must show actual damage or harm resulting from the employer’s conduct.
The general rule is that an employee cannot recover damages for the hurt feelings or mental pain and suffering – known as
aggravated damages – they experience as a result of being terminated
Possibility of losing job was anticipated since both parties agreed the contract could be terminated with notice
However, Wallace v. United Grain Growers Ltd. (SCC) noted that damages for mental suffering or hurt feelings could be awarded
to a dismissed employee if the employer engages in bad faith in the manner of dismissal
The employer should be candid, reasonable, honest, and forthright with employees in the manner in which they terminate the
employment contract
A failure to meet this standard would be treated as bad-faith discharge
Damages for bad-faith discharge would be awarded by extending the period of reasonable notice
Ex. Employee entitled to 8 months reasonable notice based on Bardal factors might get 10 months if the court ruled that the
manner in which the employee was dismissed was in bad faith
Years after Wallace, many employees included claims for Wallace damages in their wrongful dismissal lawsuits
In dozens of cases, judges extended the notice periods when they felt employers were unduly insensitive in the manner in which
they dismissed employees
When Wallace damages were ordered, they tended to be in the range of an additional one to four months added to the period of
reasonable notice
Wallace damages became common in the years following the release of the decision—so much so that judges began to question
whether the Wallace approach to aggravated damages was working.
Wallace Damages: A phrase commonly used in wrongful dismissal decisions in Canada to describe damages ordered against an
employer for acting in bad faith in the manner in which it terminated an employment contract (first ordered in SCC Wallace v.
UGG 1997)
There are now dozens of Canadian wrongful dismissal decisions in which courts have ordered aggravated damages for bad faith
in the manner of dismissal
Employer behaviour that courts have found to constitute bad-faith discharge include the following:
- Being dishonest about the reason for dismissal
- Making unwarranted attacks on the employee’s job performance or honesty, such as by falsely accusing the employee of
misconduct
- Communicating the termination in an insensitive manner
- Handling the complaint in a procedurally unfair manner, such as by refusing the employee an opportunity to explain alleged
wrongful acts
- Refusing to pay statutory benefits, to file documents necessary to permit the employee to access government benefits, or to
provide a reference letter
- Harassing the employee
- Threatening the employee with a large counter lawsuit if the employee dares to file a wrongful dismissal lawsuit, or needlessly
dragging out the litigation to impose further costs on the employee
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Under Wallace, the employee was not required to prove that they suffered actual physical harm as a result of the manner in
which the dismissal took place
The employee had only to present evidence that the employer acted in an unduly insensitive manner when it fired the employee,
and if the judge agreed, the judge would extent the notice period and therefore the amount of damages owed
Under the Honda approach, the employee must now present some evidence that established that they suffered physical or
psychological harm caused by the employer’s insensitive behaviour rather than the fact of being dismissed
In the Honda approach, the court will not simply extend the notice period by a month or two but instead compensate the
employee for the actual harm suffered
Ex. if the employee cannot work due to depression caused by the employer’s bad faith in the manner of dismissal, then the
employer could be liable for lost wages damages going far beyond the notice period under the former contract
Vicarious Liability: A legal rule under which an employer is liable for damage caused to a third party by one or more of its
employees
C. Punitive Damages
Awarded for advertent and wrongful acts of the employer that are so malicious and outrageous that they deserve punishment;
They must represent an independent actionable wrong;
The standard is very high.
Not intended to compensate the employee for actual harm suffered like the other 2
Intended to punish the employer for its reprehensible conduct
Goal of punitive damages are denunciation, deterrence and retribution and they are only awarded when the court believed that
other damages will not satisfy those goals
To obtain punitive damages in a wrongful dismissal lawsuit, the employee must point to an independent actionable wrong, such
as a tort or breach of a contract term other than the term requiring notice of termination
Ordered relatively infrequently, high legal threshold for punitive damages
Ex. Walmart ordered to pay 200k in aggravated damages plus 500k in punitive damages for demoting a VP to a lower-ranking
exec. Job but refused to define her new position or assign a clear role for 10 months before they eventually terminated her
After terminated, Walmart failed to abide by the clear contract language requiring payment of wages for 2 years and then used
delay tactics to stall the litigation
The lower court ruled that Walmart’s conduct violated the implied duty of good-faith dealing in a high-handed manner
In the 2018 decision Bailey v. Service Corporation, a British Columbia court ordered $110,000 in punitive damages against an
employer that terminated a long-serving, 60-year-old employee when he was off work sick. The employee found out he had been
terminated when his wife was told by an insurance company. The employer then falsely maintained that the employee had been
terminated for cause
The first two compensate employees for harms suffered as a result of the employer’s wrongful behaviour
Punitive damages serve the broader purpose of retribution, deterrence, and denunciation in cases where employers have behaved
so reprehensibly that the courts believe punishment is necessary
IV. The Duty to Mitigate Compensatory Damages
Requires that we distinguish between two types of contractual promises dealing with termination found in employment contracts
The first is a promise by the employer to pay the employee a predetermined amount of money at the time of termination, such as
3 months’ notice of termination or pay in lieu of notice
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This clause creates a binding obligation on the employer to either give the employee three months’ working notice or pay the
employee 3 months’ wages when it terminates the contract
When a contract spells out a specific amount of notice or pay in lieu of notice to which an employee is entitled as a condition of
termination, the employee is under no obligation to try and reduce their losses unless the contract includes an expressed term
requiring the employee to do so
Even if the employee immediately gets a new job, the previous employer still has to pay the full 3 months pay despite the fact
that this means the employee receives somewhat of a windfall
Also applies to fixed-term contracts that are terminated early by the employer
The second type of clause does not define a specific amount of notice or pay in lieu of notice that is required but instead requires
the employer to provide the employee with reasonable notice of termination
A failure of the employer to comply with the contractual obligation to give reasonable notice repudiates the contract and entitles
the employee to recover damages for wrongful dismissal
A promise to give reasonable notice is not the same thing as a promise to pay three months’ wages as a condition of termination
The importance of the distinction rests in a rule of contract law that requires the innocent party to minimize their losses
This rule is known as the duty to mitigate
It requires an employee dismissed without reasonable notice to do their best to limit the damages incurred from not having
received reasonable notice
A court rules that Stephen’s contract required the employer to provide three months’ reasonable notice of termination. The
employer dismissed him with no notice. Stephen’s wages amounted to $2,000 per month. After one month of unemployment,
Stephen got a new job that paid him $1,500 per month. His damage award in the wrongful dismissal lawsuit would be calculated
as follows: Lost wages arising from wrongful dismissal: 6k, deduct earnings from new employment: 3k, total amount of damages
employer must pay: 3k
If the employee does not make a reasonable attempt to mitigate damages then they may lose some money
If the employee finds a new job, any award of damages for wrongful dismissal is reduced by the income received from the new
employment.
A. The Standard of Mitigation Required
Burden is on the employer to persuade the court that the employee could have mitigated their losses but failed to do so (did not
make a reasonable effort to seek new employment and also that, if the employee had done so, they probably would have gotten a
new job)
Duty to mitigate boils down to two key obligations imposed on the dismissed employee:
1. Make reasonable efforts to look for a new job
2. To accept a job offer that a reasonable person in their position would accept (including a job offer from the very employer who
has just fired the person)
Employee are usually given up to 2-3 months recovery time immediately after dismissal during which time they are not expected
to be actively looking for work
After, employees are expected to take reasonable steps to mitigate the damage resulting from the wrongful dismissal
An employee is not required to accept any job that comes up
Test whether the employee acted reasonably in their effort to find new work:
The duty to “act reasonably” … must be a duty to take such steps as a reasonable person in the dismissed employee’s position
would take in his own interests—to maintain his income and his position in his industry, trade or profession. The question
whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the
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employer who has wrongfully dismissed him. The former employer cannot have any right to expect that the former employee will
accept lower-paying alternate employment with doubtful prospects
Types of Jobs
In applying the reasonableness test, courts have rules that employees can decline job opportunities that would amount to a
substantial step backward from their previous job, including much lower pay and status
Employees are not required to apply for jobs they are clearly not qualified for or to accept a part-time job rather than hold out for
a full-time position
If job opportunities in the employee’s field are scarce, then reasonable mitigation may include returning to school or taking new
training programs
A dismissed employee may be required to accept a job in a different geographical location if no local jobs are available; however,
the extent to which an employee is required to uproot and move depends on the employee’s age and personal circumstances
In one case, an employee was considered to have failed to mitigate when he declined a job offer in the same field as his former
job to pursue a new career as a self-employed real estate agent, a decision the court believed was too “risky.” The court ruled that
it is unreasonable, and a failure of the duty to mitigate, for an employee to pursue self-employment rather than a new job in their
field, unless the evidence discloses that the employee would not have been able to find a job in their traditional field
It is also unreasonable for an employee to hold out for a job with a specific employer when reasonable opportunities are available
with other employers in their field
B. Mitigation with a Job Offered by the Former Employer
A reasonable person would likely accept a job offer from the former employer when the following conditions are met:
1. The salary offered is the same, the working conditions are not substantially different or the work demeaning, and the personal
relationships are not acrimonious
2. Returning to the old workplace would not place the employee in an “atmosphere of hostility, embarrassment or humiliation.”
Since Evans, employers frequently offer dismissed employees job opportunities during the notice period in an attempt to reduce
the damages payable. Some employees who refuse those offers have been found to have failed in their duty to mitigate (see Box
14.5). In the majority of cases, though, courts have ruled that employees were not required to accept mitigation with their former
employer on the basis that the offered job was not substantially similar or that it would be humiliating or unreasonable to expect
the employee to return to their old workplace
However, when the circumstances of the termination were not hostile or contentious, and the terminated employee is offered a job
of similar status and pay, courts have found that the employee was required to accept the offer of mitigation with the former
employer
Mitigation standard is not high
Chapter 20 – Regulating the End of Employment Contracts
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Minimum Notice and Statutory Severance under the Employment Standards Act (ESA)
-
Minimum notice or payment in lieu; [s. 57]
Mass termination notice; [s. 58 of the ESA and s. 3 of
Statutory severance. [ss. 63-6]
O. Reg. 288/01]
Minimum notice or statutory severance is not payable to employees who are “. . . guilty of wilful misconduct, disobedience or
wilful neglect of duty that is not trivial and has not been condoned by the employer.”
Minimum notice and statutory payments are deductible from the common law reasonable notice period. [Ref. Stevens v. The
Globe and Mail, 1996 (ON CA)]
Minimum Notice
A wrongfully dismissed employee is entitled to statutory minimum notice or payment in lieu.
-
These are minimum notice requirements only.
For younger employees with minimal employment service, the minimum notice requirement may be sufficient.
In most instances, the employee’s entitlement to notice or payment in lieu will be greater than the minimum notice requirement
under the ESA.
One week. Employed by the employer for less than one year.
Two weeks. Employed by the employer for one year or more and less than three years.
Three weeks. Employed by the employer for three years or more and less than four years.
Four weeks. Employed by the employer for four years or more and less than five years.
Five weeks. Employed by the employer for five years or more and less than six years.
Six weeks. Employed by the employer for six years or more and less than seven years.
Seven weeks. Employed by the employer for seven years or more and less than eight years.
Eight weeks. Employed by the employer for eight years or more.
The termination of 50 or more employees at the employer’s establishment within any four-week period (group termination)
requires the following minimum written notice:
-
Between 50 and 199: minimum 8 weeks’ notice;
Between 200 and 499: minimum 12 weeks’ notice;
500 or more: minimum 16 weeks’ notice
The employer must pay as a lump-sum payment one week’s pay for each year of employment (part years are credited) to a
maximum of 26 weeks where:
-
Fifty or more employees are terminated within a six-month period caused by the permanent discontinuance of all
or part of the employer’s business at an establishment; or
The employee has been employed by the employer for five years or more and the employer has a payroll of at
least $2.5 million
Just Cause Provisions: A term in a collective agreement between a union and an employer that requires the employer
demonstrate just cause, or a good business reason, to discipline or dismiss an employee
II. Statutory Minimum Notice of Termination Requirements
A. Common Features of Statutory Notice of Termination Provisions in Canada
Statutory Notice of Termination: The requirement found in employment standards legislation for employers (and sometimes
employees) to provide a defined amount of notice that they are terminating the employment contract
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Absent a statutory notice of termination requirement, employers and employees would be able to agree to zero notice contracts
similar to American “at will” employment contracts
Employers can offer statutory notice of termination or termination pay
Termination Pay: The payment owing to a dismissed employee under employment standards legislation that is in lieu of
working statutory notice
Notice of termination must be in writing so that disputes over whether notice was given and when it was given are reduced or
eliminated
Termination and severance pay are not subject to common law duty to mitigate
Although Canada’s statutory notice of termination provisions vary from one jurisdiction to another, they share some common
features:
1. Minimum Notice of Termination: Qualifying and Length of Notice
3 months in Ontario until employee is eligible for statutory notice of termination
Probationary Period: A period of time at the beginning of an employment contract during which the employer evaluates an
employee’s suitability for further employment
3. Definition of Termination of Employment
Only an employee who has been terminate can get statutory notice of termination
Employment standards legislation incorporates the common law doctrine of constructive dismissal into the definition of
termination, so that a constructive dismissal triggers the employee’s entitlement to statutory notice
Definition of termination in the Ontario ESA:
An employer terminates the employment of an employee … if, (a) the employer dismisses the employee or otherwise refuses or
is unable to continue employing him or her; (b) the employer constructively dismisses the employee and the employee resigns
from his or her employment in response to that within a reasonable period; or (c) the employer lays the employee off for a period
longer than the period of a temporary lay-off
Sometimes the regulatory standards and common law regimes diverge. One example is the treatment of temporary layoffs. We
saw in Chapter 13 that in the common law regime, a temporary layoff can be treated by the employee as a constructive dismissal,
thereby entitling the employee to notice of termination, unless the contract includes a right of the employer to temporarily lay off
the employee. In Canadian employment standards legislation, in contrast, temporary layoffs are not considered a constructive
dismissal (or a termination), at least not initially. That’s because the statutes define when a “temporary layoff” becomes a
permanent layoff, or a “termination” for the purposes of the legislative entitlement to notice of termination
In Ontario a temporary layoff is no more than 13 weeks in any period of 20 consecutive weeks
4. The Exemption of Certain Employees from Statutory Notice Entitlements
Many employees are exempt from the legal entitlement to statutory notice
Construction workers and other occupations are excluded as they often work on discrete projects with no predetermined end date
or who regularly move between job sites
Frustrated contracts can be an exemption
Also employees who are employed under a fixed-term or fixed-task contract whose contract ends as agreed
An employee who has been lawfully laid off and then is recalled to work forfeits the entitlement to statutory notice if they do not
return to work
In every jurisdiction, an employee is disqualified from statutory notice when they have engaged in serious misconduct leading to
termination for cause
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This rule closely parallels the common law doctrine of summary dismissal considered in Chapter 12. If an employee’s
misconduct would allow the employer to dismiss the employee for cause, without notice, in the common law regime, then the
odds are that the statutory requirement to provide minimum notice is also exempted
However, in some provinces the employment standards statute imposes a standard of just cause that it is more difficult for the
employer to satisfy than the test for summary dismissal in the common law
For example, in Ontario, the legislation disqualifies from statutory notice (and severance pay) “an employee who has been guilty
of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” The
element of “wilfulness” means that conduct that could justify summary dismissal under the common law test may not meet the
test for disqualifying an employee from statutory entitlements
5. An Employee’s Statutory Obligation to Provide Notice of Termination
A few provinces (Manitoba, Saskatchewan, Alberta, Newfoundland and Labrador, and Nova Scotia) do require employees to
provide a small amount of notice to their employer, ranging from one to two weeks, depending on the employee’s length of
service. Newfoundland and Labrador is the only jurisdiction in which the length of notice required is the same for both employers
and employees, ranging from one week’s notice to six weeks’ notice, depending on the length of employment.
B. The Interrelationship Between Statutory and Contractual Notice of Termination Requirements
Contractual notice entitlements depend on what the contract states
An employer can be in compliance with the statutory minimum notice of termination provisions and yet still be in breach of the
contractual notice of termination provisions
The statutory minimum notice requirements were enacted to provide a cheaper, quicker, and less complex legal notice model
accessible to employees who are disinclined to pursue their often much more extensive contractual notice entitlements. The
prohibitive cost of litigating wrongful dismissal lawsuits puts the common law courts out of reach for many workers, which, as
Box 20.3 describes, creates an access to justice concern
FIGURE 20.1
III. Severance Pay (Ontario and Federal)
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Both jurisdictions require employers to pay additional money beyond whatever is required in terms of statutory notice obligations
to qualifying employees
These payments are called severance pay
Severance Pay: Compensation that an employer must pay to a qualifying employee who has been dismissed; this compensation
is in addition to what is required by statutory notice obligations
The amount of severance pay is tied to length of service, so it is a benefit targeted at longer service employee
In Ontario, only employees with at least five years’ service are eligible for severance pay, whereas in the federal jurisdiction the
minimum threshold is 12 consecutive months’ service
Section 64(1) of the Ontario Employment Standards Act, 2000 also restricts severance pay to employers who meet one of the
following two conditions: (a) the severance occurred because of a permanent discontinuance of all or part of the employer’s
business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed
within a six-month period as a result; or (b) the employer has a payroll of $2.5 million or more
The amount of severance pay an employee is entitled to receive in Ontario is one week’s pay per year of service (or part thereof)
up to a maximum of 26 weeks’ pay
In the federal jurisdiction, the formula is two days’ pay for each complete year of service, with no maximum but with a minimum
benefit of five days’ pay
The exemptions that disqualify an employee from statutory notice tend to be mirrored in the severance pay provisions. For
example, an employee who quits or is dismissed for cause, as defined in the legislation, is disqualified from severance pay.
Severance payments (as well as termination pay) made by an employer are deducted from a wrongful dismissal damage award so
that the employer does not pay twice.
IV. Statutory Protection Against Unfair Dismissal
Two types of statutory protection against unfair dismissal in Canada: laws that prohibit dismissals contrary to public policy and
unjust dismissal laws
Unjust Dismissal Laws: A statutory law that imposes restrictions on the contractual right of employers to dismiss employees for
any reason at all
A. Laws That Prohibit Dismissals Contrary to Public Policy
A number of statutes prohibit the dismissal of employees for reasons contrary to public policy (ex. discriminatory grounds)
Collective bargaining legislation makes it unlawful for an employer to dismiss an employee for joining a union or engaging in
lawful union activities
Available remedies for dismissals contrary to public policy usually include reinstatement as well as back wages and
reimbursement for lost benefits
Most employment-related statutes also include anti-reprisal provisions that make it unlawful to dismiss an employee for
attempting to enforce their statutory rights
Whistle-Blowers: Employees who disclose information about wrongdoing committed by their employer
Most of this legislation applies to government employees only. For example, Manitoba’s Public Interest Disclosure
(Whistleblower Protection) Act creates a legal right for a government employee who “reasonably believes that he or she has
information that could show that a wrongdoing has been committed or is about to be committed” to report that wrongdoing to a
supervisor, a senior official, or an ombudsperson appointed by the government. If the disclosure is made, then the statute
prohibits any reprisal against the employee, including dismissal, and grants the power to the labour board (an expert tribunal) to
reinstate a dismissed employee.27 Other jurisdictions have enacted similar legislation.
B. Unjust Dismissal Laws
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Chapter 28 – Introduction to the Collective Bargaining Regime and the Canadian Labour Movement
Collective Bargaining: Negotiations between an association of employees (Usually but not always a union) and an employer or
association of employers aimed at reaching a collective agreement
Strike: Legislation can assign a particular definition to the word strike. In Canada, strikes are usually defined to include both (1)
a collective refusal by employees to perform work, and (2) a deliberate collective slowdown by workers designed to restrict the
output of an employer (commonly known as a work to rule)
Recognition Strike: A strike by workers with the aim of pressuring an employer to recognize and bargain with a union on behalf
of the employees
Conspiracy to Injure: A tort that involves two or more people acting in combination with the intention of causing harm to
another party and actually causing that harm
Intimidation: A tort that involves an attempt to coerce another person to do something or to refrain from doing something they
are entitled to do by the threat of an unlawful act
Nuisance: A tort in which the activities of one person unreasonably interfere with the use or enjoyment of the property of another
person
Inducing Breach of Contract: A tort that involves wrongful acts by a third party that are intended to cause a breach of contract
between two other parties
Interlocutory Injunction: A temporary court order prohibiting conduct that is potentially unlawful until a decision is released by
the court on whether the conduct is unlawful
Yellow Dog Contract: A contract or contract term that requires an employee to refrain from joining a union or permits
termination for cause of an employee who joins a union
Conciliation: A form of mediation in which a neutral collective bargaining expert attempts to assist an employee association (ex.
a union) and an employer association in reaching a collective agreement
PC 1003: Federal legislation that granted workers collective bargaining rights, including protection from anti-union
discrimination by employers and a limited protected right to strike, and imposed on employers a legal duty to bargain with unions
representing a majority of workers
III. The Outputs and Legal Institutions of the Collective Bargaining Regime
Collective Agreement: A contract between an employer (or employers) and a trade union (or trade unions) that sets out the
conditions of employment for a group of employees
Lockout: A tactic whereby an employer refuses to permit employees to report to work and to pay the employees to apply
pressure on the employees and their union in collective bargaining
Labour Relations Boards: Expert administrative tribunals responsible for enforcing and interpreting labour relations legislation
Labour Arbitrator: An individual or three-person expert arbitration panel appointed to decide disputes over the application and
interpretation of collective agreements
Judicial Review: The process through which a decision of an expert administrative tribunal is appealed to a court on the basis
that the tribunal exceeded its authority (or jurisdiction) as defined in the statute that created it or that the tribunal’s decision was
wrong. How much deference a court must give to the expert tribunal’s decision is a complex question that is considered in a field
of law known as administrative law
IV. Who is Governed by the Collective Bargaining Regime in Canada?
Common law doctrines like constructive dismissal and wrongful dismissal no longer apply to an employee governed by a
collective agreement and represented by a union
When employees decide to switch from the common law regime to the collective bargaining regime by joining a union, they are
electing to fundamentally alter the legal framework that governs their relationship with the employer
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Union Coverage Rate: The percentage of employees whose employment conditions are governed by a collective agreement
bargaining on their behalf by a union
Union Density Rate: The percentage of employees who are union members
Union Membership: The number of people who are members of a union
Public sector is almost 4x more with unions that private
V. Canadian Unions Today: A Snapshot
International Unions: A union that represents workers in more than one country
Local Union: A local branch of a union; it is part of and chartered by a parent union
Parent Union: A larger umbrella organization made up of smaller local unions. It provides service to its member local unions,
such as training of local union representatives, maintaining strike funds, and providing collective bargaining supports and legal
expertise
Union Business Representative: An employee of a union whose job includes assisting local unions in the negotiation of
collective agreements and administration and enforcement of collective agreements.
Union Steward: A representative of a union in a workplace, often elected by employees in that workplace, who is responsible for
representing employees in day-to-day concerns about working conditions and collective agreement administration
Grievance Procedure: A provision of the collective agreement that explains when and how a grievance alleging a breach of the
agreement can be filed and what process will be used to mediate the grievance and, if not resolved, to refer the grievance to
binding labour arbitration. A grievance procedure usually includes several “steps,” with the final step being referral to arbitration
Canadian Labour Congress (CLC): The largest federal confederation of unions in Canada, representing 3 million Canadians.
Its main roles are to lobby governments, provide leadership on key issues, and provide training and education resources for its
member unions. It holds a national convention every three years
The CLC serves a number of important functions for the Canadian labour movement
First, it advocates and lobbies for legislative and policy initiatives at the national level, especially for things it believes benefit
union members and Canadian working people in general
Second, the CLC provides a variety of educational and other supports to affiliate unions, especially smaller ones that lack
resources
Third, it represents the interests of the Canadian labour movement in the international arena, such as at the International Labour
Organization
Fourth, the CLC attempts to regulate and limit inter-union conflict. In particular, the CLC had adopted a policy relating to union
raiding, which occurs when one union seeks to displace another union as the representative of a group of workers. Unions
affiliated with the CLC are expected to not “raid” other CLC affiliates
However, the CLC has no legal authority to sanction a union that violates this pact, and in recent years there have been some
high-profile disputes relating to alleged union raiding
The media story in Box 28.3 describes the recent decision of Unifor, Canada’s largest private sector union, to leave the CLC
following a dispute about the CLC’s raiding rules
Union Raiding: An attempt by one union to organize workers who are represented by another union
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Chapter 31 – The Unionization Process
To organize a workplace, a union must:
-
Obtain the signatures of at least 40% of workplace employees on membership cards; and
Apply to the Ontario Labour Relations Board to conduct a ballot.
If a majority of employees in the workplace vote for the union, it will be certified by the Ontario Labour Relations Board
Why organize?
-
Greater bargaining power;
Better terms and conditions of employment;
Higher salaries;
Improved benefits;
Increased job security based on seniority;
Grievance procedure to resolve disputes;
Assistance of union representatives
Tactics vary
-
The union can initiate the organizing process;
Disgruntled workers can initiate the process;
The union can approach workers outside of the workplace;
Union organizers can call and visit workers’ homes;
The union cannot contact workers in the workplace
The objective is to convince at least 40% of eligible employees in the proposed bargaining unit to sign union membership cards;
[ss. 8. (2) and 10. (1)]
With 40%, the union can request a workplace ballot supervised by the Ontario Labour Relations Board
A trade union is defined in the Ontario Labour Relations Act [s. 1] as an organization of employees with a prescribed objective:
“The regulation of relations between employees and employers.”
It bargains to improve working conditions
Timing of Certification Applications
-
If the employer is not unionized, any union can apply at any time;
If the employer is unionized, then an application by another union is permissible only during “open periods” (see
pp. 507-8)
Only “employees” as defined by the Labour Relations Act are eligible. [s. 1. (3)]
Those excluded are
-
“Managers,” i.e., executives and those who make decisions affecting the livelihood of other workers.
“Confidentials,” i.e., those whose duties involve confidential information on labour-related matters that would
compromise the employer if disclosed.
“Certain Professionals”
o If they are employed outside their professional capacity, they may be included in the bargaining unit
(e.g., certain Ryerson instructors);
o Dependent Contractors. Those who perform work for another in circumstances of economic dependence,
and perform duties that resemble an employment relationship rather than an independent contractor
relationship (e.g., truck drivers who own their own trucks but work exclusively for one company)

Worker who exhibits greater autonomy and independence than a typical employee, yet who
nevertheless remains economically dependent and largely under the control of one business
What is a Bargaining Unit?
The union will describe the proposed bargaining unit in its certification application. The employer may respond, stating that it is
too broad or too narrow.
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The Labour Relations Board will ultimately decide
Traditional “Community Interest” Test
-
Similar work;
Similar conditions of employment;
Similar skills of employees;
Similar administrative requirements;
Geographical proximity (if multiple locations);
Functional coherence and interdependence
Traditional “Community Interest” Test (cont’d)
-
Will any suggested bargaining unit fragmentation cause unnecessary disruption and industrial conflict?
What is the degree of interference with the employer’s administrative structure?
Will certain employees be denied a reasonable opportunity to form a union
Certification
If a union shows that at least 40% of the members of the proposed bargaining unit have signed membership cards, the Ontario
Labour Relations Board will call a certification vote.
Any disputes will be addressed after the certification vote
Required information in the certification application:
-
Proposed bargaining unit;
Name of the union and contact person;
Employer identification;
Estimated number of employees in the proposed bargaining unit and an indication that the union has signed up at
least 40% of the eligible employees;
An indication if the applicant union is aware of any other unions having bargaining rights to all or part of the
proposed bargaining unit;
Proposed time and location for the certification vote
The employer’s response to the certification application:
-
Corrects any union misinformation concerning the employer;
Confirms its legal name and designated contact person;
Describes the general nature of its business;
Provides a list of employees in the union-proposed bargaining unit.(If it disagrees with the inclusion of a particular
employee in the unit, places an asterisk next to the employee’s name);
Agrees with or proposes an alternative voting scenario;
Challenges, if it wishes, the union estimate of the number of employees in the bargaining unit;
Provides, if it wishes, an alternative description of the proposed bargaining unit;
Provides an estimate of the number of employees in the employer-proposed bargaining unit
The board will determine voting constituency. If there is a dispute concerning an employee’s right to vote, he or she will be
permitted to vote, but that vote will be segregated and not counted until the dispute is resolved.
The vote is supervised by the Ontario Labour Relations Board.
There is only one question – “Do you, or do you not, want to be represented by the union?”
The ballot is secret.
Mail-in ballots are permitted in rare instances.
Absentee balloting is not permitted.
Voting takes place on the employer’s premises during working hours.
Employees must identify themselves to vote.
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The employer is required to post the results of the vote.
The parties have five days to object
Bars to Certification
Certification cannot take place if any employer or employers’ organization:
-
Participated in the formation of the union;
Participated in the administration of the union;
Contributed financially or otherwise supported the union;
Favoured one union over another in a contest for the same workers
Certification will be denied if the union discriminates against an employee on any prohibited ground under the Human Rights
Code, and if the vote takes place within one year from the most recent failed certification vote.
Unfair Labour Practices
The union cannot
-
Use intimidation or coercion to obtain signed union cards; [s. 76]
Organize during working hours; [s. 77]
Put fraudulent information on completed union cards
For a viable collective bargaining regime, there must be constraints on the actions of employers that interfere with the right of
employees to unionize.
The employer
-
Can express its views so long as it does not resort to threats, coercion, intimidation, promises or undue influence;
[s. 70]
Cannot participate in or interfere with the formation, selection or administration of a union; [s. 70]
Cannot refuse to employ or discriminate against employees because they are or were union members; [s. 72 (a)]
Cannot impose any condition restraining a person seeking employment from joining a union; [s. 72. (b)]
Cannot seek by threat of dismissal or other penalty to prevent an employee from joining a union or remaining a
union member; [s. 72. (c)]
Anti-union animus is assumed.
Statutory Freeze
Once the employer receives a notice of application for certification, there is a freeze on the terms and conditions of employment.
[s. 86. (2)]
To determine whether any employer statement or action is intimidation, the Labour Relations Board asks, “Would an employee of
‘average intelligence and fortitude’ be intimidated?”
The onus of proof of an unfair labour practice resides with the party making the complaint, unless the employer is alleged to have
fired, threatened, coerced, intimidated, not hired, or discriminated against any employee or prospective employee.
The burden is on the employer to demonstrate that its actions were not motivated by anti-union bias. [s. 96. (5)]
Remedies for the finding of an unfair labour practice include: (pp. 535-37)
-
Cease and desist order;
Reinstatement;
Damages;
Notices posted of offence and remedial steps;
Authorization for the union to hold a meeting at the workplace;
Apology;
Remedial certification order.
Unions can earn the legal right to represent employees in two voluntary ways: by obtaining a government-issues license (union
certification) or through voluntary recognition, whereby the employer agrees to bargain with a union that has not been certified
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II. The Pillars of the Canadian Collective Bargaining Model: Majoritarianism and Exclusivity
Wagner Act, 1935, once a union demonstrates it has the support of a majority of employees in a bargaining unit, the union
becomes the exclusive bargaining rep of all the employees in the bargaining unit, even those employees who did not seek the
unions representation or join the union
Bargaining Unit: A group of workers whose work is similar enough that they are thought capable to be covered by the same
collective agreement. Importantly, not all bargaining unit members necessarily choose to join the union
The twin concepts of majoritarianism and exclusivity were borrowed and incorporated into Canadian collective bargaining
legislation in the mid-1940s, as explained in Chapter 29, and remain a pillar of the Canadian model to this day. This is an all-ornothing model of freedom of association. If 100 employees are in the bargaining unit and 50 of them desire union representation,
then none of the employees are entitled to collective bargaining, because the union requires majority support to acquire the legal
right to represent employees.2 On the other hand, if 51 percent of employees support unionization, then their decision sweeps the
remaining 49 percent of employees who rejected unionization into the collective bargaining regime. This legal model encourages
a contest for the hearts and minds of employees. That contest begins with a union organizing campaign
Majoritarianism: A principle of the Wagner model, it asserts that a union must secure the support of a majority of employees to
win the right to act as their representative
Exclusivity: A principle of the Wager model, it asserts that the union chosen to represent workers becomes the sole or exclusive
legal representative for that group of workers
III. The Union Organizing Campaign
Unfair Labour Practice: An action undertaken by either the union or the employer that violates one or more articles in the
relevant labour relations legislation
Union Organizer: An employee of a union whose principal duties include organizing new workplaces and building union
membership
A typical union organizing campaign begins with private meetings between employees and a professional union organizer outside
of the workplace and hushed conversations at the workplace. Sometimes union organizers make first contact with employees by
leaving union flyers on car windshields or approaching employees as they enter or leave the workplace. In other cases, employees
contact a union to ask about organizing a union at their workplace
Once contact is made, union organizers meet with those employees who initially express interest, usually at the union office or
another location away from the workplace, such as a coffee shop
Employee support usually collected in the form of signed union membership cards or union authorization cards in some
jurisdictions which indicate that the employee wishes the union to represent them in bargaining
Union Membership Card: A document that indicates a worker’s desire to join and become a member of a union
Union Authorization Card: A document that indicates a worker’s consent and desire to have the union identified on the card
represent them in collective bargaining with an employer
Captive Audience Meeting: A meeting that employees are ordered by their employer to attend to listen to the employer’s
opinions on whether employees should or should not support unionization
In contrast, unions have no legal right to enter employer property to speak to employees, except in rare cases such as when
employees work and live on employer property (e.g., a remote mine) or when the entrance to the workplace is located in a space
where the public usually has access (e.g., a shopping mall)
Unlike in Britain, there is no right of unions to do a presentation to workers at the workplace, or a right to receive contact
information so unions can send information to workers at their homes, as in the United States. In 2017, the Ontario Liberal
government introduced a law entitling unions to a list of employees with “a phone number and personal email” to facilitate
communication during organizing campaigns, but a newly elected Conservative government quickly repealed the law in 2018
Unions rely heavily on inside union organizers to persuade their co-workers to sign union cards
Those cards are then returned to the union organizer. If the union collects sufficient cards to meet the required legislative
threshold, it can file an application for certification with the applicable labour relations board
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Inside Union Organizer: An employee who assists in efforts to unionize their own employer
Application for Certification: A formal legal document filed by an employee or union with a labour relations board that
commences a process to determine whether the union qualifies to become the legal collective bargaining representative of a
group of employees
IV. The Union Certification Process
It is the role of a labour relations board to determine whether a union has satisfied the requirements for certification
A. Jurisdiction and Trade Union Status
The first task for labour boards when they receive an application for certification is to ensure that the employer involved falls
within their jurisdiction and that the application was filed by a “trade union.” (Ontario cannot process unions from other
provinces or the federal government like banks)
Labour boards must confirm that a trade union filed the application
Trade Union: The organization’s objectives include regulating employee relations through collective bargaining and that the
organization be independent of the employer
Labour boards have ruled that to qualify as a “trade union” an organization must demonstrate a degree of formality, such as by
having bylaws or a constitution, and an executive or officers who have authority to act on its behalf to bargain collective
agreements on behalf of employees
Company Union: An employee association created with the encouragement or assistance of the employer and that is not
independent of the employer’s control or influence. A company union is often created as a union-avoidance strategy
B. Timeliness of Certification Applications
Restrictions exist when a union can apply for certification, so labour boards must next ensure that the application is timely
These restrictions break down generally as follows:
1. If the employer is not unionized: Any union can apply at any time to represent its employees. However, there may be a
restriction (known as a statutory bar) on a union that had previously filed an unsuccessful application for certification relating to
the same or similar group of employees rejected in the recent past
Statutory Bar: A rule found in collective bargaining legislation that prohibits an application from being filed for a defined period
of time
2. If the employer is already unionized: An application for certification by another union to represent the unionized employees
(known as a union raid or displacement application) can only be filed during an open period defined in collective bargaining
legislation
A newly certified union is given a grace period of between 6 months (in British Columbia) and 12 months (in most other
jurisdictions) to bargain a first collective agreement, during which time no other union can apply to displace it as the
representative of the employees in the bargaining unit
When a collective agreement is in effect, open periods arise during the final months of the agreement. For example, in Ontario, if
the collective agreement is for less than three years, the open period is during the final three months of the agreement; and if the
collective agreement is for greater than three years, the open period is during months 34 to 36 and then the last three months of
every subsequent year
Open periods ensure that a union’s representation rights can be challenged periodically
Union Raid: An attempt by one union to organize workers who are represented by another union
Open Period: A period of time defined in a collective bargaining statue during which a union may apply to displace another
union as the representative of a group of employees, or during which unionized employees may file an application to de-certify
the union
C. Measuring Employee Support for the Union and Collective Bargaining
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Assuming that a “trade union” has filed a “timely” application for certification, the labour board then turns to the crucial issue of
assessing the level of employee support for the union
This step begins with a review of union cards submitted by the union to determine the number of employees who support the
union and want collective bargaining
The union cards are compared to a list of employees provided by the employer to calculate the percentage of workers who
support collective bargaining
To protect employees from possible reprisals, the identity of the employees who sign union cards is not disclosed to the employer,
although the employer may learn during the certification process how many or what percentage of employees signed union cards
A simple fraction ultimately determines whether workers have access to the collective bargaining regime. Let’s refer to it as “the
Golden Fraction”:
Number of employees who want the union to represent them in collective bargaining divided by the number of employees
eligible to participate in the decision
Bargaining Unit Employees: An employee whose job falls within a bargaining unit either represents or is seeking to represent
The composition of the Golden Fraction gives rise to a multitude of potential legal disputes that are routinely dealt with at labour
relations boards across Canada:
1. Who is the True Employer?
Subcontracting, temporary placement, etc. can confuse things
Collective bargaining legislation grants labour relations boards discretion to declare two or more business to be related employers
for collective bargaining purposes
For a related employer declaration to be made, the board required 4 conditions to be met:
1. There must be more than one business entity
2. The entities concerned must carry on associated or related activities
3. Those activities must be carried out under common control or direction
4. There must be a labour relations reason to make the common employer declaration
Related Employers: Two or more companies ruled by a labour relations board to be carrying out associated or related activities
under common direction and control and, therefore, to by a single employer for collective bargaining purposes
2. Is the Group of Employees that the Union is Seeking to Represent an Appropriate Bargaining Unit for Collective
Bargaining Purposes?
Chapter 33 / 34
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Negotiating the Collective Agreement
Effective with certification, the union is the exclusive representative of the employees in the bargaining unit
The employer is legally obligated to recognize the union and bargain exclusively with the union
Commencement of Negotiations
Following certification or the voluntary recognition by the employer of the trade union as bargaining agent for the employees in
the bargaining unit, the trade union shall give the employer written notice of its desire to bargain with a view to making a
collective agreement
Either party to a collective agreement may, within the period of 90 days before the agreement ceases to operate, give notice in
writing to the other party of its desire to bargain with a view to the renewal, with or without modifications, of the agreement then
in operation or to the making of a new agreement
Onus is on the union to give the employer notice to bargain within 60 days of certification, or at least 90 days prior to the
termination of a collective agreement
Failure to do so may result in decertification of the union as the bargaining agent for the employees
Structure of Negotiations
Bargaining Committee:
-
May include professional negotiators, particularly if the local union is part of a larger union;
May include a labour lawyer as an advisor;
May include professional negotiators and advisors for the employer;
Typically does not include the most senior officials of the union or of the employer
Meetings
The OLRA requires the parties to meet within 15 days after notice to bargain. [s. 17]
Meetings frequently are held away from the employer’s premises to avoid interruptions.
In addition to a room for negotiations, each party will want a separate room to caucus between negotiation sessions
Demands or Proposals
Each party submits a set of proposals at the outset of negotiations.
Matters for negotiation are lengthy and complex.
Considerable research is required, as well as internal review and discussion as to what are the parties’ priorities
Procedure
Traditionally, the union submits its demands, with a rationale for each.
If the employer is looking for rollbacks, it will table its position with a rationale.
Proposals may be segregated into discrete parts (e.g., monetary vs. non-monetary) and addressed separately
“A proposed collective agreement that is entered into . . . has no effect until it is ratified as described in subsection (3).” [s. 44.
(1)]
“. . . A proposed collective agreement . . . is ratified if a vote is taken . . . and more than 50 per cent of those voting vote in favour
of ratifying the agreement. . . .” [s. 44. (3)]
Ratification
If the negotiators reach a tentative agreement, it must be ratified by a vote of the union members and approved by employer
management
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The ratification vote is administered by the union. It must meet certain criteria under the OLRA.
-
[ss. 44, 79, 79.1]
It must be a secret ballot;
All employees in the bargaining unit are entitled to vote, including any who have not joined the union;
A convenient place and time to vote must be provided;
The ballot must provide the simple option of acceptance or rejection of the tentative agreement;
A mail-in ballot option must be provided;
Ratification requires approval by more than 50% of those voting
Factors influencing the outcome of negotiations:
-
A strike and its perceived impact (by both parties);
A lockout and its perceived impact (by both parties);
The adequacy of the strike fund;
The employer’s ability and willingness to hire replacement workers;
Employee support
Do the parties have the same view of these influencing factors?
Each side tries to convince the other that it will be greatly harmed by what you may do, but you will not be greatly harmed by
what it may do
Statutory Freeze
Once the employer receives a notice of application for certification, there is a freeze on the terms and conditions of employment.
[s. 86. (2)]
Collective Bargaining Freeze
-
The employer cannot alter the terms and conditions of employment, without union consent, after the notice to
bargain is given;
A collective bargaining freeze comes into effect each time the union gives the employer a notice to bargain;
The test is “business as before”;
If outside of the employer’s normal course of business, then it is not permissible
Ref. Fig. 33.3
“. . . and they shall bargain in good faith and make every reasonable effort to make a collective agreement.” [s. 17]
“Good faith bargaining” is bargaining that is not “bad faith bargaining.”
The principle is concerned with the process of negotiation, not the outcome
Indicators of good faith bargaining:
-
The parties are prepared to meet and negotiate;
They acknowledge the union as the employee’s exclusive bargaining agent;
They provide relevant information.
Ref. Box 33.1
First, an employer must answer union questions truthfully. Second, an employer must disclose on its own
initiative decisions that have already been made and that “will have a significant impact on terms of
employment,” such as a discontinuance of the workplace. The timing of the announcement on the closure of the
plant was an important factor.
The board concluded: where a decision to close is announced “on the heels” of the signing of a collective agreement,
the timing of such a significant event may raise a rebuttable presumption that the decision-making was sufficiently ripe
during bargaining to have required disclosure or that it was intentionally delayed until the completion of bargaining. It
can be persuasively argued that the more fundamental the decision on the workplace, the less likely this Board should
be willing to accept fine distinctions in timing between “proposals” and “decisions” at face value and particularly when
strong confirmatory evidence that the decision-making was not manipulated is lacking. This approach is sensitive to the
positive incentive not to disclose now built into our system, and the potential for manipulation. Indeed, a strong
argument can be made that the de facto decision doctrine should be expanded to include “highly probable decisions” or
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“effective recommendations” when so fundamental an issue as a plant closing is at stake. Having regard to the facts in
each case the failure to disclose such matters may also be tantamount to a misrepresentation.
Indicators of bad faith bargaining:
-
The parties are going through the motions. No meaningful effort is made to reach a resolution (“surface
bargaining”). This does not preclude “hard bargaining”;
(Ref. Boxes 33.2 and 33.3)
Deception (e.g., pending plant closing);
Unjustifiable changes in bargaining position;
Refusal to justify a position
Hard Bargaining: A lawful strategy in collective bargaining that involves a party using its superior bargaining power to insist
upon collective agreement terms that favour its own interests
Surface Bargaining: A strategy in collective bargaining that involves a party going through the motions of bargaining but having
no intention of ever concluding a collective agreement. Surface bargaining is a violation of the duty to bargain in good faith
33,2
If a party proposes a clause in a collective agreement, or conversely, refuses even to discuss a basic or standard term, that is
acceptable and included in other collective agreements in comparable industries throughout the country, it is appropriate for a
labour board to find that the party is not making a “reasonable effort to enter into a collective agreement.” … For an employer to
refuse an employee a grievance procedure or some form of due process, by which the employee can challenge his or her
dismissal on the ground that it was not for just cause, is to deny that employee a fundamental right. Since no union would accept
a collective agreement without the arbitration clause, the refusal of the employer to negotiate that clause indicated a lack of good
faith
33.3
Issue: Did Eaton’s violate the duty to bargain in good faith by, among other actions, insisting on bargaining separate agreements
for each of more than a dozen bargaining units and by refusing to offer a raise beyond what non-union workers receive?
Decision: No. The OLRB explained that this was a case of “hard bargaining” by Eaton’s. There was nothing improper in Eaton’s
use of its bargaining power to insist on a collective bargaining process and collective agreement terms that benefit the employer’s
interests, provided that it was prepared to meet and engage in extended discussions about the union’s proposals and that it was
prepared to sign a collective agreement. The OLRB’s discussion of the issues provides a useful summary of the duty to bargain in
Canada:
A major function of the … duty [to bargain] is to oblige the parties to enter into serious negotiations with the shared intent of
entering into a collective agreement. This requires that the parties explain their positions to the other side, so as to allow for
rational, informed discussions. … An employer cannot enter into negotiations with the intent of ridding itself of the trade union.
Neither can it simply engage in “surface bargaining,” whereby it “goes through the motions” of bargaining without any real intent
of signing a collective agreement. … [The duty to bargain] does not, however, require that an employer agree to the terms of a
collective agreement proposed by a trade union. Neither does it prohibit an employer acting in its own self-interest from engaging
in “hard bargaining” so as to obtain an agreement with terms favourable to it. … The fact that the company has not made any
major concessions in bargaining relates directly to the type of agreement management is seeking to negotiate. [The duty to
bargain] does not … preclude a party from taking a firm position in bargaining. On the issue of the employer’s refusal to offer
wages and benefits above what it gives non-union workers, the OLRB wrote: Nothing in the Labour Relations Act requires an
employer to agree to wages and employee benefits for unionized employees that are superior to those being received by nonunionized employees. … Neither is there any provision which prohibits an employer when formulating its bargaining position to
take into account the likelihood that improvements in the terms of employment for one group of employees will likely impact on
other groups. Indeed, logic suggests that this is a consideration frequently taken into account by employers, since an
improvement in the employment conditions of one group of employees will logically lead to calls for similar improvements from
other employees of the same employer, whether they be unorganized or included in a different bargaining unit. Eaton’s did violate
the duty to bargain in one respect. It had insisted on a clause prohibiting workers from discussing union matters on employer
property, even during non-working time. That prohibition is unlawful interference with the right of workers to engage in union
activities, so insisting on it in bargaining violated the duty to bargain. The union’s other arguments were dismissed
Industrial Conflict
Strike
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“A cessation of work, a refusal to work or to continue to work by employees in combination or in concert or in accordance with
a common understanding, or a slow-down or other concerted activity on the part of employees designed to restrict or limit
output.” [s. 1. (1)]
The right to strike is protected by the Charter.
[s. 2 (d)] – (Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC)
Lockout
A lockout is employer action parallel to a strike.
[s. 1. (1)]
The employer refuses to permit the employees to work, where the refusal is connected to collective bargaining
When can the union strike or the employer lock out the employees?
-
When the collective agreement has expired;
For a strike, provided the workers in the bargaining unit have voted to strike;
When conciliation has been undertaken without success;
When 14 days have passed after the Minister of Labour issues a no-board report
Strike vote
A strike vote requires the approval of more than 50% of those voting; [s. 79. (3)]
It is conducted by the union;
It is a secret ballot;
All employees in the bargaining unit are entitled to vote (even those who have not joined the union);
A convenient place and ample time to vote must be provided;
The ballot question is: Do you authorize or not authorize the calling of a strike?
“A question on a ballot used in a vote to ratify a proposed collective agreement . . . shall be limited to giving the persons entitled
to vote a choice between ratifying the proposed collective agreement . . . and not ratifying the proposed collective agreement . . .
and shall make no direct or indirect reference to the calling of a strike.”
[s. 79.1 (2)]
A strike does not end the employment relationship.
Under the Ontario Labour Relations Act, the employer is required to reinstate workers at the end of the strike.
Employers can hire replacement workers, but it is an unfair labour practice for an employer to hire a company or individuals as
strikebreakers, or to engage in any other form of strike-related misconduct. [s. 78. (1)]
“ ‘Professional strike breaker’ means a person who is not involved in a dispute whose primary object, in the Board’s opinion, is to
interfere with, obstruct, prevent, restrain or disrupt the exercise of any right under this Act in anticipation of, or during, a lawful
strike or lock-out.” [s. 78. (2)]
“ ‘Strike-related misconduct’ means a course of conduct of incitement, intimidation, coercion, undue influence, provocation,
infiltration, surveillance or any other like course of conduct intended to interfere with, obstruct, prevent, restrain or disrupt the
exercise of any right under this Act in anticipation of, or during, a lawful strike or lock-out.” [s. 78. (2)]
A parallel unfair labour practice is for the union to engage in strike-related misconduct – interfering with, obstructing, restraining
or disrupting the employer’s right to lock out.
Unilateral Change in Terms of Employment
Once the parties are in a lawful position to strike/lock out, the employer may unilaterally change terms and conditions of
employment;
There is no longer a collective agreement and, therefore, no collective bargaining freeze.
Ref. Box 34.4
Facts: Employer made a unilateral change once the union / employees reached the strike date
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Issue: Can an employer unilaterally alter terms of employment without the union’s consent once the parties are in a legal
strike/lockout position?
Decision: Yes. Once the legal strike/lockout date has been reached, there is no longer a collective agreement in force, and the
collective bargaining freeze (see Chapter 33), which prohibits changes to terms of employment without the union’s consent, is
over. Therefore, reading the Ontario Labour Relations Act, 1995 as a whole, an employer is free to treat the old agreement as
expired and introduce new terms of employment. The Ontario Labour Relations Board explained that employees are not required
to accept the changed terms, because the act allows them to respond by going on strike
In Ontario, the Act is premised on the fact that the parties may engage in economic warfare once the strike/lock out conditions
have been met. Such economic warfare can, so long as it does not otherwise constitute a violation of the Act, take a variety of
forms. Unions can legally engage in strikes. They also may engage in other activity which does not amount to a full blown work
stoppage, in order to put pressure on the employer. Included in these tactics are rotating strikes, overtime bans, “work to rule”
activities, etc. The employer has a similar broad range of economic weapons at its disposal (all of which must be exercised
subject to the Act’s unfair labour practice provisions). It can lock out. It can hire replacement workers to replace locked out or
striking workers. I see no reason why, subject to the other provisions of the Act, a unilateral implementation of new terms and
conditions (which have been offered to the union in collective bargaining) cannot form part of the employer arsenal. As has
already been stated: if the union and the employees do not wish to operate under the new terms and conditions they do not have
to
The OLRA requires third-party intervention prior to any strike by employees or an employer lockout.
Conciliation
Either party can apply to the Minister of Labour for the appointment of a Conciliation Officer; [s. 18]
The objective is to assist the parties to reach an agreement;
The Conciliation Officer reports back to the Minister regarding whether or not an agreement is reached
If no agreement is reached, the Minister may establish a conciliation board or advise the parties that no board will be appointed;
In most instances, the Minister will not appoint a board, and the subsequent notification to the parties is called a “no-board
report”;
A no-board report is a necessary precondition to a strike or lockout
Voluntary Interest Arbitration
The parties may agree to have their dispute determined by a third party; [s. 40]
It is seldom agreed to;
Parties are reluctant to have someone else dictate the terms of their collective agreement.
Compulsory Interest Arbitration
For certain categories of workers (so-called “essential services”), and otherwise on an ad hoc basis, the government will require
the dispute to be resolved by binding arbitration;
The right to strike or lock out is denied.
First-Contract Arbitration [s. 43]
The OLRA provides for the imposition of a first collective agreement by arbitration if necessary;
The party seeking a first-contract arbitration must show that negotiations failed due to the recalcitrance of the other party
Chapter 35 /36
Collective Agreement
The collective agreement substitutes for the individual employer-employee contract.
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An individual employee can assert his or her rights only through the collective agreement.
The freedom to negotiate terms and conditions is subject to certain statutory prescribed limits and requirements
Mandatory / Default Provisions
Strikes and lockouts are prohibited during a collective agreement. [s. 46. (1)]
A grievance procedure, including binding arbitration if necessary, is required to resolve contractual disputes. [s. 48. (1)]
The term of a collective agreement must be at least one year.
The agreement must include a provision recognizing the union as the exclusive bargaining agent for the employees in the
bargaining unit. [s. 45. (1)]
The employer is required to deduct union dues from the employees’ pay and remit them to the union if the union so requests.
The bargaining unit must be described. [s. 47. (1)]
Management Rights
Subject to the employer’s obligations under the collective agreement, the union acknowledges the employer’s right to manage the
operation, including hiring, firing, discipline, etc.
Ref. Box 35.1 – Reserved Management Rights
Contracting Out: A practice whereby an employer contracts work formerly performed by its own employees to a third-party
business
Common Provisions
Union Business
The employees must be granted time off to attend to union affairs.
Union Security
All members of the bargaining unit must join the union; or
Union dues must be deducted from the pay of all members of the bargaining unit, whether or not they have joined the union.
(“Rand Formula”)
Workload and Work Procedures
These vary in detail and scope depending on the workplace.
Compensation
This is detailed by job classification;
It may include a cost-of-living adjustment (COLA) for multi-year collective agreements.
Vacation and Leaves of Absence
Vacation entitlement typically commences after one year’s service and increases with seniority;
Leaves of absence may be substituted for or added to those provided under the ESA;
The parties cannot contract for leaves of absence less than the ESA entitlement.
Sick Leave
The agreement may provide for short-term sick leave (a specified number of days) as well as long-term disability leave.
Medical Insurance
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The agreement may provide benefits for drug, dental, vision, and hearing care or other health-related services not provided by
government health care plans.
Seniority and Job Security
Collective agreements typically set out criteria and a process to discharge employees when there is not enough work (layoff);
“Bumping Rights.” The general principle is that layoffs proceed in reverse order according to seniority; i.e., the more junior
employee in terms of length of service is discharged before the more senior employee;
Most agreements require that the more senior employee has the skill and ability to do the job of the more junior employee;
What if the exercise of the bumping rights clause arguable breaches an enforceable employment law right, such as the duty to
accommodate under the Human Rights Code?
Ref. Box 35.2
Bumping Case: Employee was allowed to bump to volunteer position even though another employee could only be there based
on their accommodations or else they would get laid off.
The relevant test in assessing whether a proposed accommodation measure(s) constitutes undue hardship is whether the impact of
such a measure(s) results in a significant interference with the normal operation of the collective agreement, and the rights of
employees under that collective agreement. While it is clear that the union and other employees may have to “shoulder some of
the hardship to facilitate accommodation,” if the interference with the employees’ collective agreement rights is significant, then
the proposed accommodation measure will be viewed as constituting undue hardship for the other employees
Hours of Work and Overtime
The collective agreement describes the standard work week in hours per week and per day;
Time worked above these prescribed numbers represents overtime, for which a greater rate of pay is required.
The Duty of Fairness and Reasonableness in the Exercise of Management Rights
The employer must exercise conferred discretion reasonably, not arbitrarily or in bad faith;
The introduction of company rules during the collective agreement must meet a standard of reasonableness.
Ref. Boxes 35.3 and 35.5
35.3: Although the collective agreement did not contain an expressed “no harassment” clause, the arbitrator ruled that an implied
term required that management exercise its authority in a manner that avoids harassment of employees: even absent an express
provision referring to managerial abuse or harassment, and apart from the management rights provision, I determine it is an
implied term of the collective agreement that the work of a supervisor must be exercised in a non-abusive, non-harassing manner
A variety of remedial orders were made by the arbitrator, including orders that the employer (1) reimburse the grievor for the
difference in his normal pay and the lower amount he received while on sick leave due to the harassment, (2) pay $25,000 to the
grievor for “general damages,” (3) henceforth ensure that the harassing supervisor had no contact with the grievor at work, and
(4) implement a harassment policy and ensure all managers complete anti-harassment training
35.5: The union filed a grievance alleging that the requirement to submit to random alcohol testing constituted an unreasonable
rule that was not justified by any pressing business interest and that violated employees’ privacy
Issue: Was the employer’s introduction of mandatory, random alcohol testing a “reasonable” exercise of management rights?
Decision: No. The Supreme Court upheld the arbitrator’s decision that the mandatory testing was “unreasonable,” applying the
KVP test. The Supreme Court said the following about that test
What is the legal status of such ancillary documents as policies, insurance plans, pension plans, etc.?
If they are incorporated into the collective agreement (expressly or by implication), then they are enforceable through the
grievance and arbitration process
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When employers in a unionized workplace unilaterally enact workplace rules and policies, they are not permitted to “promulgate
unreasonable rules and then punish employees who infringe them” (Re United Steelworkers, Local 4487 & John Inglis Co. Ltd.
(1957), 7 L.A.C. 240 (Laskin) …). This constraint arises because an employer may only discharge or discipline an employee for
“just cause” or “reasonable cause”—a central protection for employees. As a result, rules enacted by an employer as a vehicle for
discipline must meet the requirement of reasonable cause
KVP TEST: The heart of the “KVP test,” which is generally applied by arbitrators, is that any rule or policy unilaterally imposed
by an employer and not subsequently agreed to by the union, must be consistent with the collective agreement and be reasonable
In assessing whether a rule is “reasonable,” an arbitrator must consider all of the facts and balance the employer’s legitimate
business interests and the employees’ interests, including their privacy interests
In the case of alcohol testing, an employer may test an employee in a safety-sensitive job when there exists reasonable cause to
believe impairment is a risk, such as when an employee demonstrates evidence of impairment, where there has been a serious
accident and the employer is seeking its cause, or an employee has a past history of impairment and testing is part of a
rehabilitation plan
However, absent such special circumstances, mandatory random alcohol testing would be unreasonable, unless the employer can
demonstrate that a serious alcohol problem exists at the workplace and there is no other, less intrusive means available to redress
that problem. In this case, the employer identified eight cases of employee impairment over a 15-year period, which the arbitrator
found did not meet the threshold required to justify the intrusion on employee privacy that accompanies random alcohol testing.
The Supreme Court upheld the arbitrator’s decision that ruled that the union’s grievance should succeed
For the categories of ancillary documents and whether or not they are enforceable under the collective agreement, see p. 598.
Ref. Box 35.6
Grievances and Labour Arbitration
Grievance and arbitration are at the heart of the collective agreement.
There are mechanisms for resolving disputes without a work stoppage or the threat of a work stoppage.
Both parties may file grievances
The Grievance Process
Unresolved grievances ultimately are determined by arbitration.
Types
-
Individual grievance filed by an employee;
Group grievance filed on behalf of two or more employees;
Policy grievance filed by the union;
Employer grievance
Multi-step Process
At each stage the proceedings become more formal and involve more senior representatives of the union and the employer.
Each step has a time limit.
Most grievances are settled or withdrawn.
If not settled or withdrawn, they then may be directed to arbitration
“Last Chance Agreements”
The employee is given one last chance to improve his or her behaviour. Otherwise, the employee will be terminated
Arbitration
Arbitration is a cornerstone feature of the grievance process and the collective agreement.
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It is the mandatory mechanism for resolving workplace disputes without resorting to industrial action, i.e., a strike or lockout.
[OLRA s. 48. (1)]
Arbitration is the final step in a prescribed process in the collective agreement to resolve workplace disputes.
Arbitration decisions are final and binding.
The courts are generally deferential to arbitration decisions. They will intervene only if the decision is not one that a reasonable
arbitrator would make.
Arbitrator Selection
If the collective agreement does not describe the process for choosing an arbitrator, the OLRA does.
If the arbitrator is a panel of three, each party selects a “sideperson” within a prescribed time period. The two selected
sidepersons then choose a neutral chair. [s. 48. (2)]
Arbitration Procedure
The parties may use legal counsel or specialized labour representatives, grievance officers, etc.
Generally speaking, the burden is on the union to demonstrate, on balance of probabilities, that a provision in the collective
agreement was violated.
However, if the matter in dispute is the appropriateness of employer discipline, the burden is on the employer to demonstrate that
the discipline was justified.
Although arbitrators may consult the decisions of other arbitrators dealing with comparable facts, they are not bound by them, as
a lower court is bound by a decision of a higher court in a civil litigation proceeding.
Enforcement
An arbitration decision may be enforced as a court order.
The losing party may apply for a judicial review of the arbitration order.
The authority of the arbitrator extends to dealing with any dispute that arises directly or “inferentially” from the collective
agreement. This includes torts, human rights or Charter challenges.
Ref. Box 36.4
The scope of the arbitrator’s authority includes determining whether or not the exercise (in this instance) by the employer of
management rights violated a employment-related statute, specifically the Ontario Human Rights Code.
Management must abide by employee-related codes, even if the CBA says that you can’t have a grievance they can still grieve if
the manager did something against the OHRC
The obligation of an employer to manage the enterprise and direct the work force is subject not only to express provisions of the
collective agreement, but also to the statutory rights of its employees, including the right to equal treatment in employment
without discrimination. … [Arbitrators] have not only the power but also the responsibility to implement and enforce the
substance rights and obligations of the human rights and other employment-related statutes as if they were part of the collective
agreement
Discipline and Dismissal
The employer must demonstrate just cause, on a balance of probabilities, to discipline or dismiss an employee under a collective
agreement.
The test for just cause is similar to that for the individual employment contract including, for example, reference to the context
and proportionality test set out in McKinley v. BC Tel
Ref. Box 36.6
This case describes the accepted legal test for arbitrators in considering a discipline or discipline grievance.
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Has the employer demonstrated reasonable cause to discipline the employee?
If so, was the employer’s penalty excessive?
If so, what is an acceptable penalty?
The right of the arbitrator to substitute his or her penalty for the employer’s is founded in the OLRA.
Except only where the collective agreement imposes fixed penalties for certain infractions, the arbitrator can substitute his or her
own penalty for the employer’s. [s. 48. (17)]
Ref. Box 36.7 – Mitigating Factors for Discipline or Dismissal
In assessing questions two and three of the William Scott test, arbitrators consider a large range of mitigating factors relating to
the incident, the employee’s work history, and the employee’s personal circumstances
Factors Relating to the Incident
-
Was the incident premeditated or an uncharacteristic spur-of-the-moment act?
Was there an intention to do harm or violate a rule?
How serious was the incident, in terms of harm to the employer or risk to health and safety?
Was the employee provoked?
How has the employer responded to similar behaviour by other employees in the past?
Was it obvious or known to the employee that the behaviour was unacceptable? (That is, was there a clear
employer policy known to the employee?)
Factors Relating to the Employee’s Work History
-
What is the employee’s length of service?
What, if any, prior discipline has been imposed on the employee, and for what reason?
Does the employee’s previous disciplinary record suggest a high or low risk of reoffending?
Was there a recent change in job duties or the work environment that played a role in the employee’s behaviour?
Factors Relating to the Employee’s Personal Circumstances
-
Did the employee apologize or express remorse for their misconduct?
Are there any personal factors that might have contributed to or help explain the employee’s behaviour (unusual
stress, disability, marriage or other family problems, etc.)?
What would be the personal and economic impact on the employee of losing their job? (For example, does the
employee have dependants? Is the employee’s age or skill level such that it will be particularly difficult to find
new employment?)
Grounds for Discipline and Discharge
The grounds for discipline or discharge under a collective agreement generally are the same as under the individual contract of
employment.
Dishonesty. Not every act of dishonesty is grounds for dismissal. The arbitrator will consider whether it was premeditated, how
serious, was the employee remorseful, etc.?
Poor performance/incompetence. The arbitrator must distinguish between culpable (blameworthy) incompetence and nonculpable (doing the best I can) incompetence.
Ref. Box 36.10
Following criteria that an employer must satisfy before a dismissal for nonculpable incompetence is considered just:
-
Employer must define the level of job performance required
Employer must establish that the standard expected was communicated to the employee
Employer must show that it gave reasonable supervision and instruction to the employee and afforded the
employee a reasonable opportunity to meet the standard
Employer must establish an inability on the part of the employee to meet the requisite standard to an extent that
renders her incapable of performing the job and that reasonable efforts were made to find alternate employment
within the competence of the employee
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Employer must disclose that reasonable warnings were given to the employee that a failure to meet the standard
could result in dismissal
Arbitrators have applied these criteria to both dismissals and demotions for incompetence, and in recent years arbitrators have
also sometimes required employers to satisfy the criteria as a precondition to imposing a “disciplinary demotion” as well as
dismissal for “culpable” poor performance
Disciplinary Demotion: A form of discipline in which an employee is transferred to a position of less prestige, responsibility, or
pay
Insubordination. The employer must establish that a person in authority gave a clear order that the employee disobeyed.
Exceptions to the rule include: the order may compromise health and safety; the order is illegal; it interferes with urgent union
business; or it deals with personal appearance or medical or other privacy matters
Harassment, violence and other misconduct. Not every instance of harassment, violence or misconduct is grounds for dismissal.
Relevant factors include length of service, seriousness of incident, disciplinary record, provocation, etc.
Ref. Box 36.12
Absenteeism and lateness. The arbitrator must distinguish between culpable (blameworthy) absenteeism or lateness and innocent
(non-blameworthy) absenteeism or lateness;
Only culpable absenteeism or lateness is grounds for discipline.
Off-Duty Conduct. What the employee does outside of work is generally not grounds for discipline or discharge. An exception is
where it interferes with job performance or where it may harm the employer’s business or reputation. (
Ref. Box 36.13
Intoxication. As a rule, intoxication at work is a serious offence. The employer must keep in mind whether the employee is
addicted, in which case accommodation may be required under the Human Rights Code.
Extra Notes:
MIDTERM QUESTION: Under PIPEDA security cameras can be used if there is an imminent threat
Section 7(1) then adds that “an organization may collect personal information without the knowledge or consent of the individual
only if certain exceptions apply” (if it would compromise the availability or the accuracy of the information and the collection is
reasonable for purposes related to investigating a breach of an agreement or a contravention of the laws of Canada)
*Recording theft case was allowed cameras because the footage deleted quickly, the deterrence outweighed minor privacy
interests of employees and the reason above ^ would have compromised…
For salary and benefit continuous do common law notice – statutory min notice - stat week pay
Ref. Box 31.3
A unit of just one store was not appropriate in this case due to the high degree of integration between the various stores owned by
the employer. There was a sufficient “community of interest” among employees at individual stores and among employees of all
11 stores to create a viable collective bargaining relationship owing to the similar work and human resources practices that are
fairly standard across the Tim Hortons chain. However, carving out one store from the other 10 would cause “serious labour
relations problems” for the employer. The board concluded: [T]he Board must balance the statutory goal of employee selforganization with the goal of promoting certain bargaining structures. The Board judges whether the [union’s] proposed unit is an
appropriate unit rather than the most appropriate unit. In that context, the Board may find that its concern for employee access to
collective bargaining outweighs the potential for serious labour relations problems. That is the balancing exercise necessitated in
judging whether the applicant’s single-store unit is an appropriate unit in this case. [Emphasis added] In this case, the employer
used common cooking facilities to supply doughnuts to all 11 stores; the stores shared supplies and had a unified management
system under the control of the principals of Lynn Management; hiring of employees at the various stores was centralized to a
degree by the involvement of Lynn managers; and employees occasionally moved from store to store to pick up or cover shifts.
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The board ruled that the close integration of the 11 stores rendered a single-store unit inappropriate for collective bargaining,
although it acknowledged that absent such integration, a single store may be appropriate. Since the union lacked sufficient
support in any unit larger than the single unit it applied for, the board dismissed the application for certification
Undue Fragmentation: A legal test used by labour boards to decide whether a proposed bargaining unit is inappropriate because
it would carve up the workplace into too many relatively small groups of workers, creating practical busin ess difficulties for
the employer
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