The past few years have been rife with developments in labour and employment law and 2018 was no exception. Not only did Canada become the second country in the world to legalize recreational cannabis, Ontario’s newly elected government passed legislation undoing much of the previous government’s labour and employment reforms. The Ontario Court of Appeal released yet another decision on the enforceability of termination clauses, and the Ontario Human Rights Tribunal released a ruling that could have widespread implications for the administration of employee benefit plans. In case you missed any of it, we’ve compiled a list of five of the key developments in labour and employment law from 2018 (in no particular order).
The ONCA Weighs in Yet Again on the Enforceability of Termination Clauses
Ontario courts have had a lot to say about the enforceability of termination clauses in employment contracts these past few years. Despite efforts to provide some much needed clarity to this area of employment law, the sheer volume of recent cases on this issue suggests that the law remains unsettled. At the beginning of 2018, the Ontario Court of Appeal (“ONCA”) released its decision in Nemeth v Hatch, (“Nemeth”) which considered the enforceability of a termination clause in an employment agreement.
In Nemeth, the ONCA clarified that a termination clause does not need to explicitly state that the parties are agreeing to limit an employee’s common law right to reasonable notice of termination as long as it clearly specifies some other period of notice that meets the minimum requirements of the Employment Standards Act, 2000 (the “ESA”). The ONCA also confirmed that if a termination clause is silent on providing an employee with an entitlement set out in the ESA (for example, by not mentioning the continuation of benefits during the notice period) it will still be enforceable as long as it does not explicitly limit the employee’s entitlements to only those set out in the contract. For more on this case, please check out our blog post here.
This summer, the ONCA released another decision in which it considered whether a termination clause in an employment contract was ambiguous and, as a result, unenforceable. In Amberber v. IBM Canada Ltd., the ONCA reiterated that when interpreting termination clauses, the clause should be read as a whole, and parties should not search for ambiguity where there is none. Ultimately, the ONCA held that the termination clause at issue was not ambiguous. It remains to be seen whether the ONCA will continue to weigh in on the enforceability of termination clauses in 2019.
HRTO Finds Provision Allowing Employees Over Age 65 to be Excluded from Benefit Plans Unconstitutional
Ontario employers may no longer be able to exclude employees who are over 65 years old from many of their workplace benefits plans. Previously, section 25(2.1) of the Human Rights Code (the “Code”), in conjunction with certain provisions of the ESA, allowed employers to terminate an employee’s participation in its benefit plans at age 65. However, in Talos v. Grand Erie District School Board the Ontario Human Rights Tribunal (“HRTO”) held that section 25(2.1) of the Code violated the Canadian Charter of Rights and Freedoms and, as such, an employer could not rely on this section of the Code to deny benefit coverage to employees age 65 and over.
While the provision has not been struck down and remains the law in Ontario (for now at least), employers will not be permitted to use section 25(2.1) as a defence before the Tribunal. Considering the potential implications of this decision, we suspect this issue may soon make its way to the higher courts. For an in-depth look at this case and what it means for employers, you can read our blog post on it here.
Much of Bill 148’s Labour and Employment Law Reforms Repealed with Bill 47
This year has been a roller coaster ride for employers in Ontario. Many of the changes introduced in Bill 148, the Fair Workplaces Better Jobs Act, (“Bill 148”) came into force on January 1, 2018 only to be repealed months later by the newly elected government’s Bill 47, the Make Ontario Open for Business Act (“Bill 47”). As of January 1, 2019, Ontario’s employment and labour legislation is similar to what was in force before Bill 148 came into effect. Notably, Bill 47 scrapped the all-encompassing personal emergency leave days and replaced them with specific leave entitlements for illness, family responsibilities, and bereavement. Some Bill 148 provisions remain in force, including the new domestic and sexual violence leave and the increased vacation entitlement for employees with five or more years of service. To learn more on these changes, please see our blog post here.
Awaiting Transparency: Pay Transparency Act Put on Hold
The Pay Transparency Act (“Act”), which was passed shortly before Ontario’s provincial election, would have required employers to publish salary ranges on job postings. It would have also prohibited companies from asking candidates about their salaries, and from reprising against employees who disclose their salaries to others. The aim of the Act was to promote gender equality and equal opportunity in the workplace. The Act, which was originally scheduled to come into force on January 1, 2019, has been put on hold. It is not yet clear when or if the Act will ever come into force.
Canada Legalizes Recreational Cannabis
In October, the federal government legalized recreational cannabis use and left many employers wondering what impact recreational cannabis might have on their workplace and how to prepare for any cannabis-related issues that may arise . To find out what steps you can take to ensure your workplace is prepared to deal with any cannabis-related workplace issues, please see our blog post on this topic here.
What’s In Store for 2019?
While we are only a few weeks into 2019, the ONCA’s very first decision of the new year has called into question the enforceability of arbitration clauses in employment and contractor agreements. In Heller v Uber Technologies Inc, (“Heller”) the ONCA found that the arbitration clause in Uber’s agreement with its drivers amounted to an illegal contracting out of the ESA, as the clause did not allow drivers to file a complaint and have it investigated by an employment standards officer. The ONCA also found that the arbitration clause was unconscionable. For these reasons, it declined to enforce the arbitration clause. Considering the implications of this decision, we may see more litigation on arbitration clauses in employment and contractor agreements in 2019. Employers with arbitration clauses in their employment or contractor agreements should consider seeking legal advice with respect to their enforceability in light of the Court’s decision in Heller.
Finally, it seems Ontario’s provincial government is not quite finished reforming its labour and employment laws. In December of 2018, the government introduced Bill 66, Restoring Ontario’s Competitiveness Act (“Bill 66”). While Bill 66 has only undergone first reading, it will likely progress further in 2019. If passed, Bill 66 will remove the requirement for employers to get Director approval of overtime and averaging agreements. It will also remove the requirement for employers to post information about the ESA in their workplace.
Considering all of this, coupled with the continuing momentum of the #metoo movement, the upcoming federal election, and Canada’s budding cannabis industry, 2019 is shaping up to be an interesting year for workplaces across Canada.
The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyer’s by email or telephone.