Chris and Mike ran out of time to answer all the questions from our webinar on April 17th 2025 .  As promised here are the questions and answers.  As noted in our presentation this should not be considered as legal advice for your particular situation but rather general guidelines.  If you are intending to act or have a specific follow up question please contact us directly or your professional advisors.

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The following answers are premised on the assumption the employee is covered by provincial legislation.

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We apologize in advance for saying like lawyers do “Now that is an interesting question” but many of these issues are fact driven and often the law is unclear.  For example see our comments below regarding just cause.

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Question # 1

Question

When laid off, does the employer pay for the employee contributions for benefits or does the employee send in the money that would have been deducted off their pay?

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Answer

Depends—sorry about that!

If the employee is covered by a collective agreement then that agreement will likely address the employer’s obligations during the layoff.

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If it is a layoff of a non union employee then as Chris reviewed with you it can be treated as a constructive dismissal allowing the employee to quit and sue for wrongful dismissal.  The Employment Standards Act (“E S Act”) provides that if a condition of employment is substantially altered then the Director may deem the employment terminated:  section 66.   In that case there is no issue of maintaining benefits following termination although you should tell the employee that they may have rights to convert their benefits for their own use.

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If the layoff does not constitute a constructive dismissal because you have a contractual right to layoff up to the amount allowed by the E S Act or because the employee has agreed to the layoff, there is no obligation to continue the benefits although cancellation of benefits might be a deemed termination.  If the employee is agreeing to the temporary layoff you should negotiate for the continuation of benefits subject to the terms of your benefit policies.  You might pay their portion of the benefits on his/her behalf and get a signed agreement that if they are returned to work then you can deduct the benefits premiums you paid on their behalf. Another option is to request post-dated cheques from the employee for their portion of the premium. However from a practical point of view employers who want the employees to return should make arrangements to continue the benefits.

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You should be aware that if an employee is on a leave of absence under the E S Act versus a temporary layoff then different rules apply regarding benefits under section 56:

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Employment deemed continuous while employee on leave or jury duty

• 56   (1)The services of an employee who is on leave under this Part or is attending court as a juror are deemed to be continuous for the purposes of
  
  • (a)calculating annual vacation entitlement and entitlement under sections 63 and 64, and
  • (b)any pension, medical or other plan beneficial to the employee.
• (2)In the following circumstances, the employer must continue to make payments to a pension, medical or other plan beneficial to an employee as though the employee were not on leave or attending court as a juror:
  
  • (a)if the employer pays the total cost of the plan;
  • (b)if both the employer and the employee pay the cost of the plan and the employee chooses to continue to pay the employee's share of the cost.
• (3)The employee is entitled to all increases in wages and benefits the employee would have been entitled to had the leave not been taken or the attendance as a juror not been required.
• (4)Subsection (1) does not apply if the employee has, without the employer's consent, taken a longer leave than is allowed under this Part.
• (5)Subsection (2) does not apply to an employee on leave under section 52.2.

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Question #2

Question

Can a pay and position reduction be based on Performance and argued successfully ( i.e. to not be a constructive dismissal)?

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Answer

We assume the employee is not covered by a collective agreement. For a non-union employee a change in pay could well constitute a constructive dismissal even if there are legitimate performance reasons for making the changes.  Chris covered off in the presentation the type of changes in pay that might be a constructive dismissal.

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But changing an employee’s position (i.e. a demotion) coupled with a reduction in pay becomes more likely to be a constructive dismissal. Remember, if the employee agrees to the changes instead of electing to quit and sue, then such changes would not be a constructive dismissal.

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The best way to mitigate risk with respect to demotions is to have clear contractual language/policies on when the employer has a right to demote based on performance.

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Question #3

Question

How does this effect contract workers whose set end date is before the economic recovery is foreseen?

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Answer

If the non-union employee is on a fixed term contract then the employer is obligated to continue the contract until the end of the term (unless you have negotiated an enforceable early termination clause). The state of the economy will not impact the employer’s obligation to honour the agreement. Once the contract reaches the end date, the employer’s obligations end and there is no obligation to pay severance either at common law or under the E S Act (see section 65(1)(b)). Be aware that if the employee continues working past the end date of the contract, the employment is converted into an “indefinite term” contract.  

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Question # 4

Question

What happens to those employees that have been with the organization for over 20 yrs and have very old contracts with really bad termination clause not good for the employer. How can we change these contracts to apply new E S Act clause etc.?

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Answer

You will have to negotiate new contracts to replace the old ones.  You have to provide what the courts call “fresh legal consideration” as Chris discussed.  For example you might offer the revised employment contract at the time you are providing a raise and/or a promotion that the employee would not have otherwise received.

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If the employee will not agree to the new terms then your options are to give him/her working notice and terminate the employment.  Once terminated you can offer new employment under the terms of the new contract.  We do not recommend simply giving them working notice that the changes will be implemented.

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Question #5

Question

What makes a termination clause enforceable/not enforceable?

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Answer

There might be a number of reasons. For example if the clause does not meet the minimum requirements for termination notice or pay under the E S Act it will be deemed void and unenforceable. This will be so even if the termination provisions comply with section 63 at the time of termination but the clause could be offside down the road (see for example Shore v Ladner Downs where a 30 day notice period did not comply with the E S Act because it would go below the minimum after 5 years of continuous employment).

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Ontario courts are really expanding the basis for striking down minimum standards termination clauses leading to more uncertainty whether a clause is enforceable. For example, if the clause tries to define “just cause” to a lower standard, this could be fatal. To date, the BC courts have been more employee friendly but challenges are in the works.  

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Fortunately in a case Chris took for an employer the contract does not have to specifically model the Group Termination provisions of section 64.

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The clause might also be void for ambiguity. If it has a very confusing formula or contradictory terms, this could be fatal.

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And as noted if the contract is not supported by proper legal consideration then it might be unenforceable.

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So you can see why you need to get professional advice when drafting such provisions.  You don’t want to be saying “oops” 20 years down the road!

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Question #6

Question

Is there such a thing as working notice?

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Answer

Yes in fact that is what the courts require an employer do to legally end the employment relationship if it is not for just cause.  As mentioned 95% of our business clients do not normally give working notice as they would rather not have the terminated employee around.  In that case the termination is a “wrongful dismissal” in that proper working notice was not given.  The employee then sues for damages for lack of working notice which is subject to reduction for mitigation.

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If you are going to give working notice you need to be careful regarding the form and wording of the notice in order for it to be enforceable.

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By the way if you give what the court subsequently finds to be less than reasonable notice if the employee quits then the court will reduce the damage award by the amount of that notice assuming good faith reasons for termination and no other changes.

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Question #7

Question

If a staff member gives his 2 weeks notice and the employer decides to ask them to leave right away are we required to pay the 2-week severance?

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Answer

Yes.  In fact that might arguably be a wrongful dismissal although if the employee gave 2 weeks notice then that would probably cap the notice entitlement.  Further if the employee was say an 8 year employee then the claim under the E S Act would be for 8 weeks severance pay that is not subject to mitigation.

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Question #8

Question

If you terminate an employee WITH cause, after having several meetings and have signed written notices from them acknowledging that they have been written up, are you still required to pay severance?

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Answer

Another interesting question that clients hate but the issue of what constitutes “just cause” to relieve an employer of its obligation to provide working notice or severance pay/pay in lieu has become very complicated as a result of the Supreme Court of Canada’s decision in McKinley v BC Tel.  Before that case, most employers would successfully argue that dishonesty would always be cause for dismissal.  The SCC disagreed and said that each case had to be considered on its own facts and that the approach has to be a “contextual” one.  

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It may be that following a process of progressive discipline as the question presupposes might ultimately be proven to be just cause but that still has to be considered under the McKinley test.

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I should note that “near cause” will not be used to diminish your liability—it is like being pregnant—either you are or you are not.

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Again given the complexity of this issue you are wise to get your professional advisors to review before you pull the trigger.

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Question # 9

Question

Can any union organize? for example, I haven't heard of a hairdresser union or retail worker unions?

Answer

Yes, any union that satisfies the definition of union under the Labour Relations Code can organize and apply for certification for any group of employees.  There may be some restrictions on who can apply for a craft certification under section 21 of the Code. By the way there is a retail worker union called UFCW!

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Question #10

Question

Can you terminate the benefits if the employee does not provide the cheque?

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Answer

If the employee is on a consensual layoff or on medical leave and the employee does not provide the cheque or otherwise pay for their portion of the premium, then the employer can in our view cancel the benefits in most circumstances. BUT we would caution that should only be done in the clearest of circumstances and with proper notice. Again, the best practice is to have a clear policy about what happens with benefit premiums when an employee goes on layoff or leave.