Ministry provides Ontario employers, employees guidance on employment standards – but remains silent when it comes to common law
By Stuart Rudner
How would you feel if you called the Ministry of Labour in order to get its advice regarding how much termination pay to provide one of your employees, followed the advice exactly and then found yourself being sued for wrongful dismissal?
Or, as an employee, what would you think if you contacted the Ministry of Labour to ask about the termination package you have been offered, were advised that it met all legal requirements, and then subsequently learned that, by law, you would have been entitled to 10 times more than you received?
Think this type of situation couldn't happen? The reality is that it happens all the time in Ontario, as recently reported in Canadian Labour Reporter.
This is not intended to be a criticism of Ontario’s Ministry of Labour or the representatives of the ministry that answer inquiries. Rather, my intention is to clarify what its mandate includes or, more importantly, what it does not include. The ministry and its representatives are concerned with the enforcement the Employment Standards Act, 2000. However, as many readers will already know, that is only one aspect of employment law in Ontario — and the same is true in all other jurisdictions in Canada, which are covered by their own employment standards legislation and are also governed by the common law.
Common law is the law that has evolved over hundreds of years through the decisions rendered by judges in previous cases. While employment standards legislation sets out the absolute minimum entitlements employees will have, the common law often provides greater rights. There are many ways in which the common law differs from the legislation, and I have addressed three common examples below.
Notice of dismissal/termination pay
This is the issue that creates the most confusion. Employment standards legislation sets out the absolute minimum amount of notice, or termination pay, that must be provided to an employee in the event of dismissal without cause.
If you contact the Ministry of Labour, it will refer to these requirements when advising you with respect to your particular situation. However, what it will not mention is that the common law provides that every employee is entitled to "reasonable notice" in the event of dismissal. Unlike employment standards legislation, which provides for notice periods based solely upon the employee's length of service, reasonable notice is based upon a number of factors, including the employee's age, position, and length of service.
There are no easy calculations in order to determine what is appropriate in a particular situation, and the reality is it is difficult to predict with certainty how much notice an individual will be entitled to under this regime. For that reason, we advise parties to enter into employment contracts that contain clear termination provisions — by doing so, everyone can avoid the uncertainty of having to determine what "reasonable notice" will be. If there is an enforceable termination agreement, then the common law will not apply. However, in the vast majority of cases, no such agreement exists, and the common law will require that reasonable notice be provided. However, the Ministry of Labour will not tell you about this.
I often share a story of a couple that I met many years ago. They ran a small restaurant, with the husband in the kitchen and the wife taking orders and serving meals. When they got busier, they hired a waitress. Unfortunately, that did not last and they ultimately decided they would have to let the waitress go. The husband, an older gentleman that spoke English as a second language, went to the University of Toronto law library, looked up the Employment Standards Act, and determined two weeks’ notice was required. This seemed quite low to him, based upon anecdotes that he had heard from others, so he called the ministry. It confirmed that all he had to do was provide two weeks’ notice. Wanting to be generous, he offered four weeks of termination pay to the waitress, and was shocked to receive a demand letter from her lawyer a few weeks later. It was only then that he discovered the ministry was only advising him with respect to one small aspect of the law of dismissal and that, by following its advice, he had exposed the restaurant to a substantial wrongful dismissal claim.
Many people assume every employee is subject to a probationary period. If you contact the Ministry of Labour, you will be advised it is not necessary to provide any notice of dismissal or termination pay if the employee is dismissed within the first 90 days.
This will confirm the commonly held view for most people. However, it is only true if the parties have entered into a contract which clearly states the employee will only be entitled to the minimum amount of notice required by employment standards legislation, or that the employee will be subject to a 90-day probationary period during which she can be dismissed without notice or termination pay. Otherwise, the common law will apply and reasonable notice will still be required, even during the first three months of employment. This is another issue where following the advice of the ministry will lead you astray.
Another common source of confusion is the matter of temporary layoffs. Employment standards legislation in some jurisdictions sets out parameters for such layoffs, including the maximum length of a temporary layoff before it will be deemed to be a termination. However, the legislation does not give employers the automatic right to temporarily lay an employee off — that can only be done by contract.
In some industries, it will be an implied term of the employment agreement that temporary layoffs will occur. The construction industry is a good example. However, for most employees, unless there is a clear term in their contract which provides this right to the employer, then temporarily laying the employee off will constitute a constructive dismissal. Unfortunately, if you were to contact the ministry and ask them about temporary layoffs, it will refer to the legislation and confirm a temporary layoff is lawful so long as it meets the criteria set out therein.
As I said at the outset, this is not intended to be a criticism of the ministry or their staff. However, given that most people do not understand the differences between the employment standards legislation and the common law, it would certainly be helpful if the ministry warned people that their advice relates solely to the legislation and that they may have additional rights and obligations the ministry cannot advise them on. Otherwise, the unfortunate reality is that many individuals who contact the ministry are giving up valuable rights, and many employers that seek the advice of the ministry unwittingly expose themselves to liability.
I have said this before, and although it still sounds self-serving, the most prudent course of action when you are unsure of your rights and obligations is to consult a lawyer that specializes in the area. It will almost always be far less expensive to prevent an issue that it will be to fix it.
Stuart Rudner is an HR lawyer and a founding partner of Rudner MacDonald LLP, a Toronto-based firm specializing in Canadian employment law. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at firstname.lastname@example.org. You can also follow him on Twitter @CanadianHRLaw and join his Canadian HR Law Group on LinkedIn.