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Terminating Older Employees

With our aging workforce, there is an increasing need to terminate more senior employees in order to make room for younger, new entrants to the workforce. As has been discussed in other posts, whether an employee has been wrongfully dismissed is dependent on the amount of notice of termination or payment in lieu thereof that was provided. One of the key factors during a terminated employees severance entitlement is their age and seniority. As a general rule, an employee of more advanced age is typically entitled to enhanced severance as compared to younger employees.

The reason for this is that advanced age employees are likely to have substantial difficulty in obtaining alternate employment, especially if they are approaching retirement age. Accordingly, the severance package is intended to bridge the gap for the period of time the terminated employee is off work. In many recent cases, Courts have awarded payments up to 30 months of severance to a senior employee that was terminated without cause in Ontario

In Ozorio v. Canadian Hearing Society, the Plaintiff was a non-executive level employee that terminated at the age of 60 years old. The Court awarded 24 months of severance given the disadvantage she would have in locating alternate employment.

In order to avoid massive severance obligations to senior, advanced age, long-term employees, employers can ensure that well-written employment agreements are drafted to restrict an employees entitlements on termination and/or they are at liberty to provide advanced working notice of termination rather than payment in lieu thereof. In other words, if an employer intends to terminate an employee in the future, they can provide several months advanced notice, in order to avoid the obligation to make a lump sum severance payout.

If you have any questions about a recent termination from employment in Ontario, feel free to contact Goldstein Law Firm today.

Severance Pay for Long-Term Employees

With the aging of our population, a number of workers that have been employed by the same company for a long-period are either entering into retirement or oftentimes, are terminated due to a restructuring, as companies seek to bring on new, younger employees. In determining how much severance is owed to a long-term employee at an advanced age, reviewing precedents (i.e, other cases in Ontario employment law where judges have granted severance pay to employees in similar circumstances), is the best guide to determine how much you are entitled to.

In determining what is fair and reasonable in the circumstances, a Court will consider a number of factors, including but not limited to the employee’s age, the length of service with the company, and the level of job specialization. The main consideration underpinning this assessment is ‘how long is it expected to take for the terminated employee to obtain alternate comparable employment after the termination?’

Employees that have spent a long period of time with one company are not well-versed in the contemporary means available to apply for jobs; and accordingly, may have more difficulty in their job search. In addition, though employers cannot discriminate against employees on the basis of age, it is a common understanding that employees of a more advanced age typically find it more challenging to obtain a job as they approach 65 years of age. Accordingly, employees that have been terminated without cause with a long length of service and at an advanced age will be entitled to substantial severance packages.

The case of Lalani v. Canadian Standards Association is an example of a case whereby a 60-year old employee with 30+ years of service was awarded two-years of severance.

Please note that the vast majority of severance packages are inadequate. As a senior employee with a long length of service, you may be entitled to 100’s of thousands of dollars. It is imperative that you contact a qualified employment lawyer to discuss your termination prior to signing back any severance package.

Temporary Layoffs in Ontario

Temporary laying off an employee in Ontario often occurs in the context of seasonal businesses that required a reduced headcount during slow times of year or businesses that are in general decline. Rather than paying our full severance obligations to an employee, as required on the termination of employment, as discussed here and here, a temporary layoff affords the employer the opportunity to take an employee off of payroll for a defined period of time.

In employment law in Ontario, termination and a layoff have two very distinct meanings. A termination is a complete end to an employment agreement, which, if implemented on a without cause basis, gives rise to severance obligations. A layoff, on the other hand, is when an employer temporarily cuts off an employees employment, with the expectation that they will return back to work within a defined time period. Should the layoff exceed the maximum amount of time permitted to layoff an employee in accordance with the employment standards legislation in the province, the layoff will transform into a termination.

Under the Employment Standards Act in Ontario, employers are permitted to temporarily layoff an employee for a period of up to 13 weeks in a 20-week period. There are also rights to extend the layoffs under certain conditions. Under the Employment Standards Act, section 56 governs the layoff of employees working in Ontario.

A key issue with layoffs that an employer must be aware of is that despite the right to issue a temporary layoff as contained in Section 56 of the Employment Standards Act, an employer does not have the unilateral right to temporarily lay off an employee without a contractual right to do so. In other words, an employment agreement must be signed between the employer and employee that expressly authorizes a temporary layoff. Absent an agreement authorizing the layoff, the employer is not permitted to layoff the employee for any period of time. As such, the layoff will constitute a constructive dismissal at law, if the employer does not agree to bring the employee back to work immediately.

If you are an employee that has been temporarily laid off in Ontario, it is best to consult with an employment lawyer to determine whether the employer has complied with their obligations. It is imperative that you seek legal advice before agreeing to a layoff to ensure that you understand your legal rights.

Inducement in Employment Law

Many employees will voluntarily apply for job positions and obtain employment on their own volition. However, in certain circumstances, a highly coveted employee may be recruited away from a long-term position for a new job with lofty promises.  These promises could include representations of long-term employment, salary raises, incentive compensation, and overall better work-life balance.  If a third-party employer or recruitment agency contacts you and induces you to leave long-term employment for a new job, this could have implications in the event your new position is terminated without cause after a relatively short period of time.

When determining the amount of severance pay an employee is entitled when terminated without cause from their employment in Ontario, the Courts will consider a number of factors, including the length of service the employee has been working with the company, the age of the employee, the level of seniority, and the amount of time the employee is expected to obtain replacement employment. Another factor that is relevant in determining the severance pay calculation is whether the employee was recruited away from previous long-term employment.

If an employee was induced away from a long-term job for a new employment only to be terminated without cause shortly thereafter, a Court may use the entire length of service (previous job + new job) for the purposes of calculating the terminated employees severance entitlement. Accordingly, inducement has the impact of increasing an employees entitlement to reasonable notice. In determining whether an argument of inducement will be successful, the Court looks at a variety of factors, including but not limited to:

-The expectation of the parties when the new employment agreement was entered into. Specifically, were representations made to the employee to suggest that a long-term employment relationship would be reasonably expected?  If a probationary clause is contained in the new employment agreement, this suggests tentative, or a trial employment, rather than permanent employment. Accordingly, a probationary clause in an employment agreement can undermine an argument of inducement;

-The length of time the employee remained employed in the company.  Inducement tends to be weakened the longer the length of time an employee remains employed with a new company.

There are many other factors that are relevant in determining whether an argument of inducement will be successful in increasing the reasonable notice period for an employee that has been terminated without cause in Ontario.  If you have recently been terminated from your employment after being recruited from a long-term position, please contact the Goldstein Law firm for a free consultation to discuss your rights.

Bill 148 – Other Changes to Employment Laws in Ontario

Bill 148, the Fair Wages, Better Workplaces Act, 2017, is one of the largest overhauls to Ontario’s employment laws in decades. The change that has garnered the most attention is the increase in the minimum wage to $14.00 per hour; however, there are a number of other changes that employers and employees alike have to be familiar with to comply with their obligations.  The following note provides a sample of a few of the changes that workers in Ontario must be apprised of:

No Sick Notes – an employee calling in sick is no longer required to provide a sick note from a doctor to substantiate the medical leave. We have often confronted problems when employees take unjustified or unsubstantiated absences, which can lead to allegations of just cause for dismissal. The threshold for just cause has been raised by the introduction of this law, as employees have such limited obligation to their employers if they are unable to attend work due to a sickness.  The rationale for this policy is partially to free up doctors’ time to attend to other patients rather than write sick notes for absentee employees.

Vacation Pay Changes – employees that have been employed with the same employer for more than 5 years are now entitled to a minimum statutory vacation of 3-weeks per year; whereas workers with less than 5 years of tenure with an employer continue to be entitled to 2-weeks of vacation pay per year.

Scheduling Rules – employees have the right to request a change to their schedule or location after three (3) months on a job; employees can refuse shifts without reprisal if they are notified 96 hours or less prior to the start of the shift.

Personal Leave Enhancements – Previously, only companies with 50 or more employees were statutorily mandated to require personal emergency leave; workers of all employers, regardless of size, are now entitled to 10 personal emergency leave days per year, the first of 2 which must be paid.

Compliance with the above-referenced changes to Ontario’s employment laws as introduced by Bill 148 is mandatory. Employers should ensure that they are complying with their statutory obligations to avoid any complaints and potentially penalties issued by the Ministry of Labour. For further information on all of the changes introduced by Bill 148, employers and employees are advised to contact an employment lawyer well-versed in the legislation.

Termination for Cause – Recent Example

As we have discussed previously in this blog, terminating an employee for just cause has been considered the ‘capital punishment’ of employment law. As such, the employee ought to have displayed misconduct so egregious to justify such a termination. The onus of proving just cause is on the employer.¹

Absenteeism and lateness, ² fraud, theft, dishonesty, or a series of improper behaviors can justify a termination for cause. The Court will apply a contextual analysis; considering the surrounding circumstances, such as the duration of the employment, the number of previous incidents of misconduct, the age and specialization of the employee, among other things.³

If an employer does not have cause for termination, then the employer is required to pay reasonable notice of termination or payment in lieu thereof. The factors considered by the Court in determining the length of reasonable notice include age, length of employment, seniority, specialization, and any other extenuating factors, as initially enumerated by the Court and as commonly referred to as the Bardal factors. In terms of an employees entitlements to termination pay in the event of a just cause termination, an employee is entitled to the minimum statutory notice as outlined in the Employment Standards Act (“ESA”), and, absent an enforceable termination provision limiting the employees’ entitlements upon termination to ESA minimums, reasonable notice of termination or payment in lieu thereof at common.

With respect to just cause terminations, the Court has held that the standard of conduct required to negate an employees entitlement to reasonable notice of termination at common law is lower than the high threshold of misconduct required to nullify an employees entitlement to ESA entitlements. In other words, employees that display gross misconduct may still qualify for minimum ESA entitlements, which can be rather substantial if a long duration of employment has accumulated, but at the expense of his or her common law entitlement.

If you have been terminated from your employment for cause, it is imperative that you consult with an employment lawyer about your rights and obligations.

 

 

¹Dowling v. Ontario (WSIB) 2004 CanLII 43692
² S. v. H. & D.P.M. Inc.,1999 CanLII 14865 (ON SC
³
McKinley v. BC Tel, 2001 SC 38

 

What Are An Employment Lawyers Fees?

Employers will typically underpay your severance package, relative to your entitlements under the Employment Standards Act (“ESA”) and common law in Ontario, as the employer hopes that a terminated employee will not seek legal advice to enforce their rights to a full severance package. If you hire an employment lawyer and your severance package does not comply with all statutory and common law obligations, you are likely to receive substantial additional funds from your former employer. Goldstein Law Firm has collected 100’s of thousands in additional funds for clients in employment disputes.

Free Consultations

We are, of course, always asked – what are your fees?  Fortunately enough, clients do not experience “sticker shock” when we explain our fee structure. Firstly, there is no obligation and the initial consultation is free. If you would rather advise us of your legal issues in writing, please feel free to fill out our confidential contact form here and Mr. Goldstein will respond to your inquiry shortly (without charge).

Contingency Fees

In the majority of employment law cases, we are retained on the basis of a free consultation and we typically charge clients on a contingency fee basis (i.e., a percentage of funds we recover on your behalf) in accordance with the guidelines set out by the Law Society of Ontario (LSO). If we are unsuccessful in negotiating a settlement or obtaining a more successful court judgment than originally offered by the employer, you will not be required to pay our legal fees*. Our fee structure is subject to exceptions depending on your case.

Employers Pay a Portion of Legal Fees

In the context of wrongful dismissal claims, employers are typically required to reimburse at least a portion of the legal costs incurred by the employee; accordingly, more monies will go into your pocket at the settlement of your case, and we are always sure to request employer payment of employees legal fees that arise from challenging the termination of employment.

For more employment law questions, feel free to contact Goldstein Law directly for an explanation of our fee structure.

*In the context of litigation in Ontario, an adverse costs award system require the losing party to pay a portion of the successful parties legal fees. In the event we commence a lawsuit to recover monies for you, we will explain in further detail the potential cost consequences.

Employment Standards Act Obligations

Under the Employment Standards Act (ESA), employers are required to provide employees minimum entitlements upon the termination of employment, which includes but are not limited to the following:

-Up to a maximum of 8 weeks of termination pay, calculated as one-week of termination pay per year worked; and

-If the employer has a payroll over $2.5 million and the employee worked for the company for 5 or more years, they would be entitled to severance pay equivalent to one week per year worked plus the fraction of the year worked prior to termination.

When you are terminated from your employment, the employer is obligated to provide these minimum ESA payments by your next scheduled pay date.  Employees’ entitlements to severance pay are greater than the requirements of the ESA, which only sets out the minimum standards. In fact, the common law, or judge-made law in Ontario, which reflect a series of cases in the employment law realm is what governs employees entitlements on termination.  According to this judge-made law, employees can be entitled to one-month per year worked, or more, termination pay, depending on the circumstances.

The Court will take into consideration a variety of factors in determining the quantum of termination pay required in the circumstances.  The factors include (a) age of employee; (b) likelihood and ease of re-employability; (c) duration of employment; (d) circumstances around the dismissal; and (e) specialization of the position and level of seniority at the company.  All of these factors are relevant to the analysis into the appropriate termination pay in the circumstances.

It is important to note that, when an employee is terminated, they may be offered the minimum requirements under the ESA, and asked to sign off on a Full and Final Release, preventing you from bringing any future employment-related claim whatsoever in exchange for accepting the initial offer. Based on our discussion, the ESA entitlements are a minimum, and the employee should be discouraged from signing the Release absent a consultation with experienced employment counsel. If you do, in fact, retain an employment lawyer to negotiate an enhanced severance package, the employer will still be required to pay your minimum entitlements owing under the ESA, irrespective of a signed Release, while the negotiation is ongoing.

If you have any questions or concerns about your severance package, please do not signed the settlement documents at first instance before consulting with an experienced employment lawyer regarding your rights and obligations.