Understanding Employment Termination Laws in Ontario – Sometimes It Works Both Ways

Two very different Ontario court cases have helped to clarify the responsibilities of both employers and employees when it comes to their legal rights in employment termination. Here is a summary of those cases and the lessons that were learned through these proceedings.

Case #1

Singh v Qualified Metal Fabricators Ltd.

Mr. Singh had been employed by Qualified Metal Fabricators (“QMF”) for approximately four years as an assembler and spot welder when QMF terminated his employment without cause. QMF provided him with four weeks’ pay in lieu of notice. They also provided the minimum entitlements under the Employment Standards Act (ESA) in accordance with Mr. Singh’s written employment contract. Mr. Singh sued QMF for wrongful dismissal. He claimed that he was entitled to reasonable notice of his termination, and not merely the four weeks’ pay in lieu of notice required under the ESA.

Court Finding

The presiding judge concluded that because the termination clause did not expressly exclude common law notice, it was “an open question whether the [the termination clause] was or was not intended to override common law notice entitlement.” Accordingly, he found the termination clause was ambiguous and ruled against the employer. Based on the employee’s age and experience, the Court ruled that Mr. Singh was entitled to four months’ notice at common law.

What We Can Learn

Employers should be cautious when drafting contracts to ensure that such contracts clearly and unambiguously identify an employee’s entitlements upon employment termination.

Case #2

Gagnon & Associates Inc. v Jesso

This case involved two salesmen who been working for Gagnon and Associates for ten years when they resigned. They were a big part of the employer’s operations, and were jointly responsible for approximately 60 percent of total sales. The two salesmen got jobs with a competitor and submitted their letters of resignation. One of them, Jesso, offered to continue working for two more weeks, if the employer paid him about $30,000 that he claimed was owing to him. The employer declined this offer. The two employees left and took many of Gagnon’s clients with them, causing the company’s sales to suffer significantly.

Court Finding

The Court first considered whether the defendant resigned rather than being constructively dismissed, and if so, whether he failed to give adequate reasonable notice. The Court found that Jesso did in fact resign and effectively gave no notice. He did offer to remain for two weeks if the employer paid him the monies owed to him. But he also indicated that he would not undertake any new work during that two-week period. This was simply not enough time to replace this employee and reasonable notice in this case would be far more than two weeks. The Court ruled that two months’ notice would have been appropriate and awarded damages to the company for their estimated losses during this period.

What We Can Learn

The Court’s ruling is significant because it affirms the application of reasonable notice at common law. Employees, just like employers, have a common law obligation to provide reasonable notice of termination. And employers can successfully claim for damages if they suffer losses as a result.

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