2024 had significant legislative and case law developments in Employment Law. We narrowed down the top 10 updates you need to know to stay ahead in 2025!
- Dufault v. The Corporation of the Township of Ignace 2024 ONCA 915(Decided December 2024)
Starting with the last decision of the year, 2024 ended with one of the most talked about cases of the year, Dufault v The Corporation of the Township of Ignace. In this case, the Trial Court struck down yet another termination provision and awarded the employee the remainder of her fixed-term contract. The Court cited two reasons for finding that the clause was unenforceable.
First, the “cause” termination provision contravened the Employment Standards Act, 2000 (ESA) by stating that the employer could terminate the employee “for cause” without further payment of any kind except as provided by the contract. The clause then defined “cause” as including, but not being limited to, (i) a failure to perform services, or (ii) acts of willful negligence or disobedience.
The Court held that both the language of “for cause” and the specified grounds of “failure to perform services” fell below the standard required by the ESA and, as such, the clause was invalid.
Second, the Court held that the “without cause” provision also contravened the ESA because it allowed the employer to terminate the employee “at any time” and in the employer’s “sole discretion”, in contravention of the ESA’s prohibitions against termination at certain times, such as at the end of a protected leave.
On Appeal, the Court of Appeal for Ontario upheld the Court’s position that the “cause” provision was unenforceable, although it refrained from commenting on whether the “without cause” provision was enforceable.
This case is yet another reminder for Employers of the importance of drafting well-written Employment Agreements and having them reviewed on a regular basis! - Kopyl v. Losani Homes (1998) Ltd., 2024 ONCA 199 (Decided March 2024)
In Kopyl v. Losani Homes, the Court of Appeal for Ontario found that the employer could not rely on an invalid early termination clause in a fixed-term employment contract to void the fixed-term aspect of the contract and limit their liability. Instead, the terminated employee (Kopyl) was entitled to the entire amount remaining of the fixed-term contract.
Kim Kopyl, the employee was hired by Losani Homes on a one-year fixed-term contract with an annual salary of $150,000. Losani Homes terminated the contract six (6) months into the one-year fixed term and only paid the employee four (4) weeks’ pay in line with the without cause early termination clause in the contract. Kopyl sued Losani Homes for wrongful dismissal arguing that the early termination clause was invalid and that she was owed the remaining six (6) months of the fixed term.
In its creative defence, Losani Homes tried to argue that even though the termination clause in the fixed-term contract was invalid, the Court should view the one-year fixed term as a type of ‘termination clause’ and the fixed term aspect of the contract should be struck down, requiring the employee’s entitlement to be considered based on common law notice, not the fixed-term contract. The Court of Appeal did not agree, finding that a fixed term clause is not a termination clause. Losani’s appeal was dismissed and they were required to pay the employee the full salary and benefits for the six months remaining in the contract.
This case not only emphasizes the importance of having well-drafted employment agreements in place, it also highlights the common misconception that fixed-term contracts provide employers with more protection. In fact, as this case shows, the opposite is often true. A fixed-term contract can leave employers with a significant risk of paying the entirety of the contract when terminated earlier than the end date. Companies should avoid fixed-term contracts whenever possible and understand that such contracts do not provide more protection than a well-drafted indefinite employment contract with a solid termination clause. - Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332 (Decided May 2024)
In a recent Ontario Court of Appeal decision, the court upheld a $50,000 award for aggravated damages which was awarded in addition to a notice award of 24 months! The employee, Mr. Krmpotic was a 59-year-old employee with nearly 30 years of service, who was terminated without cause just two hours after returning to work following back surgery. The Trial court found the Company, Thunder Bay Electronics Limited, breached its duty of good faith and fair dealing, awarding 24 months’ notice instead of the 16 months originally offered. Mr. Krmpotic was physically incapable of working during the notice period. The Court of Appeal dismissed the Company’s argument that physical incapacity required expert medical evidence. This case highlights the importance of consulting legal counsel before termination, considering special circumstances like medical leave, and treating employees with fairness and respect to avoid aggravated damages. - Giacomodonato v. PearTree Securities Inc., 2024 ONCA 437 (Decided June 2024)
In Giacomodonato v. PearTree Securities Inc., 2024 ONCA 437, the Ontario Court of Appeal highlighted a foundational principle of employment law: the enforceability of a revised employment agreement requires the provision of fresh consideration.
The employee in this case signed two employment agreements – the first when he started with the Company (and which would have provided him with a more generous severance package) and a second, more limiting contract which he signed in exchange for two weeks of paid vacation and a $40,000 payment.
The court held that the employee was bound by the second contract, upholding a well-established principle that when adding new terms or diminishing the existing terms of an employment agreement, an employee must be provided with a new benefit in exchange.
The court emphasized that it does not weigh whether the new benefit is proportional to the changes in the agreement. Instead, it only requires that a clear new benefit was provided. This case underscores the importance of employers offering something new of value when modifying employment terms and reminds employees to carefully evaluate any amendments to their employment agreements. - Wilds v. 1959612 Ontario Inc. 2024 ONSC 3452 (Decided June 2024)
In Wilds v 1959612 Ontario Inc., the Court dealt with the wrongful dismissal claim of a 52 year-old Executive Assistant with just 4.5 months of service.
In awarding Ms. Wilds a 2 month notice period, the court struck down her contract’s termination clause for a number of reasons, including:
• The “without cause” provision stated that her notice pay would be calculated using only “base salary””, and thus excluded other entitlements like her vacation and bonus pay;
• The “without cause” provision also required Ms. Wilds to sign a Release in exchange for her ESA-mandated notice and severance entitlements;
However, the most interesting part of the decision was the Court’s reasoning for striking down the “with cause” provision. The Court held that not only did the provision include categories of misconduct that did not meet the high standard required by the ESA, but that the supposed “saving” language of the clause (that she would not be entitled to any pay “other than any notice, pay in lieu of notice or severance required pursuant to the applicable employment standards legislation”) was insufficient to save the provision because it was contradicted by the non-compliant categories of misconduct. The inclusion of those non-compliant categories, at a minimum, created ambiguity that rendered the clause invalid.
The Court further held that the general “savings provision” of the contract was also insufficient to save the clause. Citing previous cases like Perretta v. Rand A Technology Corporation, 2021 ONSC 2111 and Rossman v. Canadian Solar Inc., 2019 ONCA 992, the Court stated that the provision could not reconcile the directly conflicting language of the termination provision and, as such, the termination provision was void and unenforceable.
Again, Employers are reminded of the importance of drafting well-written Employment Agreements and having them reviewed on a regular basis! - Smith v. Lyndebrook Golf Inc. SC-23-00000522-0000 (August 2024)
In Smith v. Lyndebrook Golf Inc., a 51-year-old seasonal employee Golf Superintendent received 5-months notice after only working for one month. In reaching its decision, the Court considered the seasonal nature of the employee’s employment and noted that being terminated mid-season would make reemployment in his field very difficult.
This case highlights the mistaken assumption employers may make that short-service employees will not have significant claims. In any termination, employers must carefully assess all relevant factors to properly understand their exposure. Of course, the best way to protect against such exposure is via a well-drafted, enforceable employment agreement. - Maximenko v. Zim, 2024 ONSC 5540 (Decided October 2024)
In the case of Maximenko v. Zim,Ms. Maximenko was terminated on a without-cause basis after working for the employer, Zim Integrated Shipping Services for nearly 21 years. At termination, Zim offered Ms. Maximenko a notice equivalent to eight months of salary in exchange for a full and final release. She refused to sign and was paid only her statutory entitlements. She was also not paid her 2022 bonus.
The court considered Ms. Maximenko’s service, seniority of her position, the nuanced nature of the industry, and her limited work experience in Canada, and concluded that the reasonable notice period is 24 months. It also accepted that Ms. Maximenko’s efforts to find new work, though not flawless, were reasonable considering her need to care for her ill mother. The court also rejected Zim’s argument that Ms. Maximenko’s bonus should be reduced and awarded her $21,210.02 for each year of the 24-month notice period.
This case highlights that courts have been more willing to award lengthy notice periods and will not expect perfection in mitigation efforts, understanding the challenges of job hunting for older, long-service employees. This case also demonstrates that Employers should also ensure they have clear, transparent bonus policies if they want to exclude bonuses from a termination package. Zim’s failure to communicate its bonus criteria weakened its case. - Shannon Horner v Stelco Inc. Lake Erie, 2024 CanLII 16448 (Decided February 2024)
This decision by the Ontario Labour Relations Board provides insight into an employer’s obligations when investigating a workplace harassment complaint. It concerns a case where a unionized employee commenced a complaint alleging that she had been harassed on social media by several of her unionized colleagues.
The Occupational Health and Safety Act mandates that employers investigate claims of workplace harassment. The Act further requires that both the employee complainant as well as respondent are entitled to the results of any such investigation in writing, including details of any correction action. How much detail about the investigation the complainant is entitled to is often disputed.
In this case, while the case was duly investigated and a closure letter provided, the Board found that given her complaint involved five employees, she was entitled under the Act to know which of the respondents had been found to engage in the harassment as alleged, as well as the specific corrective measures that would be taken as a result of the investigation. - Zanette v. Ottawa Chamber Music Society, 2024 HRTO 998 (Decided July 2024)
In a notable decision by the Human Rights Tribunal of Ontario (HRTO), the Tribunal held that there was no evidence of discrimination after an employer requested that an employee remove a rainbow sticker from his name badge. The applicant employee was an usher at an Ottawa Chamberfest performance who placed a rainbow sticker on his name badge as a symbol of his support of the 2SLGBTQ2+ community. The manager asserted that it was a violation of their dress code policy. When the application was brought forward to the HRTO, the Tribunal held that there was no evidence that wearing a rainbow sticker was fundamental to being a member of the 2SLGBTQ2 community and that there was no discrimination that occurred. Consequently, it dismissed the application, concluding that the employee failed to establish a prima facie case of discrimination.
Legislative Changes:
Over the course of 2024, Ontario introduced a number of amendments to the Employment Standards Act, 2000, namely, Ontario Regulation 477/24, and the Fourth (Bill 149), Fifth (Bill 190), and Sixth (Bill 229) iterations of the Working for Workers Acts. The proposed changes include but are not limited to the following:.
- Effective date TBD, an employee with at least 13 weeks of service is entitled to unpaid Placement of a Child Leave of up to 16 weeks if a child is placed in their care, custody, or control by adoption/ surrogacy.
- Effective January 1, 2026, Employers are prohibited from including Canadian experience as a requirement in publicly advertised job postings.
- Effective, July 1, 2025, employers must ensure that washroom facilities are clean and sanitary.
- Effective, January 1, 2026, employers must maintain and make available washroom facility cleaning records of the two most recent cleanings and their dates and time.
- Effective June 19, 2025, an employee with at least 13 weeks of service is entitled to unpaid Long-Term Illness Leave of up to 27 weeks if they are unable to perform their job due to a serious medical condition.
If you have any questions regarding employment law or termination, please do not hesitate to reach out to Rodney Employment Law at [email protected] or complete our contact form here.