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Forums For Adjudicating Employment Disputes

In a non-unionized context, most employment disputes in Ontario are litigated in the courts. However, there are other fora for employment disputes related to workplace injuries, occupational health and safety, provincial employment standards or human rights legislation.

In the case of workplace injuries, injured workers must bring their claims to the Workplace Safety & Insurance Board if the employer is covered by the legislation.

With respect to employment standards, such as claims relating to unpaid overtime or unpaid vacation pay, complaints can be made to the Ministry of Labour.

In a unionized context, any employment disputes must proceed to arbitration before an arbitrator pursuant to the collective agreement.

The Main Sources Of Employment Law

All employment contracts in Ontario are governed by the common law principles of contract law. In some instances, legislation overrides the common law. This legislation governs, among other things, matters related to: (i) employment standards, ii) human rights, iii) pay equity, iv) accessibility, (v) workplace safety, and (vi) collective bargaining and agreements.

The Ontario Employment Standards Act establishes several minimum employment standards, including paid holidays, hours of work, vacation, leaves of absence, and notice and severance requirements upon termination of employment.

The Ontario Human Rights Code requires that all employees be given equal rights and opportunities without discrimination in employment. All other Ontario laws must be consistent with the Code.

The Pay Equity Act requires employers to evaluate jobs in their workplace. Work performed mostly by women is to be compared to work performed mostly by men. If the jobs are of comparable value, then the female employees must be paid at least the same as the males performing the comparable jobs.

The Workplace Safety and Insurance Act is legislation which establishes a compensation system for workers who sustain workplace injuries or who suffer from an occupational disease.

The Accessibility for Ontarians with Disabilities Act, 2005 mandates that employers adopt accessible practices to meet the needs of employees and job applicants with disabilities.

The Occupational Health and Safety Act sets out the duties for workplace parties with respect to health and safety.

The Ontario Labour Relations Act governs the relationship between unions and employers. Among other things, it covers the process for bringing a union into a workplace and negotiating a first contract.

National Law And Employees Working For Foreign Companies

Ontario law will apply to workers who work within the province regardless of whether the employer is foreign. However, in some circumstances, the employer and employee may specify which law governs the employment contract.

National Law And Employees Of National Companies Working In Another Jurisdiction

Generally, Ontario law will not apply to employees working in another jurisdiction. Most employment standards apply only when the employee is working in Ontario. However, contractual obligations may apply in certain cases.

The main statute governing privacy in Ontario is the federal Personal Information Protection and Electronic Documents Act (PIPEDA). The legislation applies to private-sector organizations regarding the collection, use or disclosure of personal information in the course of a commercial activity. An employee covered by the act can file a complaint with the Office of the Privacy Commissioner of Canada.

Common law also governs workplace privacy in Ontario. The Ontario Court of Appeal has recognized the tort of “intrusion upon seclusion”, a privacy tort.

In a unionized context, the collective bargaining agreement may contain provisions protecting employee privacy.

Data privacy

In Ontario, there is no provincial legislation protecting an employee’s privacy rights. The exceptions are select provisions in the Occupational Health and Safety Act; the Personal Health Information Protections Act relating to workplaces that deal with private health information; and the Freedom of Information and Protection of Privacy Act which provides that personal information can only be collected for an authorized purpose.

Legal Requirements As To The Form Of Agreement

There are no legal requirements as to the form of an employment agreement. Employment contracts may be either oral or in writing. However, collective bargaining agreements must be in writing.

Mandatory Requirements
  • Trial Period
  • There are no mandatory requirements for a “trial” or “probationary” period of employment, and there is no common law probationary period. The Employment Standards Act allows an employer to terminate the employment during the first 3 months of employment without notice and without termination pay, but that 3 month period may be waived by the employer. In addition, a longer probationary period may be used by agreement of the parties, as long as the employer complies with the minimum notice and other requirements set out in the Employment Standards Act upon termination.

  • Hours Of Work
  • With certain exceptions (which include employees employed in emergency services and many professionals), the maximum number of hours most employees can be required to work in a single day is eight hours (or the number of hours in an established regular workday, if it is longer than eight hours). In addition, the maximum number of hours most employees can be required to work in a week is 48 hours. These limits may be exceeded in extraordinary circumstances, but only to the extent necessary to prevent serious interference with the ordinary working of an industrial establishment or to machinery, or other unforeseen or unpreventable circumstances. The requirement to fill rush orders during a busy period would not qualify as an exceptional circumstance.

    In Ontario, if the employer establishes a workday of more than eight hours for the employee, the weekly limit still cannot exceed 48 hours, except in circumstances where the parties make an agreement to exceed those hours and the employer receives an approval from the Director of Employment Standards.

  • Special Rules For Part-time Work
  • Part-time workers are covered by the Employment Standards Act and are entitled to similar protections as full-time employees, including entitlement to vacation, holidays, minimum wage, and leaves of absence.

  • Earnings
  • Ontario has a minimum wage and employees may not be paid less than this amount. At the time of writing, the general minimum wage in Ontario is $14.25 per hour. There are different wage rates for classes of employees, including students, liquor servers, hunting and fishing guides and home workers.

  • Holidays/Rest Periods
  • Employees in Ontario are entitled to a minimum vacation entitlement of two weeks after each of the first four years of employment and three weeks per year after five years of employment.

    • Non-exempt employees are also entitled to statutory holidays

    Most employees are entitled to a certain number of hours free from work each day. In most cases, an employee must receive at least 11 consecutive hours off work daily. Employees must also receive at least 8 hours off work between shifts if the total time worked on both shifts is greater than 13 hours.

    In addition, most employees must not work for more than 5 consecutive hours without a 30 minute eating period free from work. This mandatory eating period can be split into two eating periods within the 5-hour timeframe, subject to agreement between the employer and employee. The eating period is typically unpaid unless the employer agrees otherwise. Whether paid or unpaid, however, eating periods which are free from work are not counted towards the employee’s overtime entitlement. In exceptional circumstances, such as an emergency or urgent repair work, an employee may be required to work during an eating period.

  • Minimum/Maximum Age
  • In Ontario, the minimum working age is 14 years for most types of work. However, young persons aged between 14 and 17 are not to be employed during school hours unless they have been excused from school attendance in accordance with the Ontario Education Act. In addition, some regulations under the Education Act specify a higher minimum age for certain types of work.

    There is no legislated maximum age for work. Such a limit could be found to be a violation of the employee’s human rights.

  • Illness/Disability
  • Under the Human Rights Code, no employer may discriminate against an employee on the basis of disability. Employers are under an obligation to accommodate disability up to the point of undue hardship.

    Further protections are afforded ill or disabled employees under the Employment Standards Act. In Ontario, there are several unpaid leaves which may be taken for reasons related to the death, illness, injury, medical emergency, or urgent matters relating to close family members.

    In addition, under the Ontario Workplace Safety and Insurance Act, an employer is obligated to re-employ an injured worker until the earliest of: two years after the date of the worker’s injury; one year after the date the worker is medically able to perform the essential duties of the pre-injury job; or the date on which the worker reaches age 65.

  • Location Of Work/Mobility
  • The location of an employee’s work will be governed by the terms of the employment agreement or collective agreement.

    There are no mandatory requirements relating to an employee’s regular place of work. However, in some cases, where an employee’s regular place of work is moved a significant distance from a current place of work, this change may result in a constructive dismissal, triggering liability on the employer for damages.

  • Pension Plans
  • There are no mandatory requirements imposed on an employer to offer a pension plan to an employee. However, once the pension plan is offered, there are rules as to the administration of the plans.

    There are two federal pension plans which apply to all employees. These are the Canada Pension Plan and Old Age Security.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • A pregnant employee will qualify for 17 weeks of unpaid pregnancy leave if she was hired at least 13 weeks before the date the baby is expected to be born. Pregnant employees are entitled to pregnancy leave whether they are full-time, part-time, or contract employees.

    Birth mothers who take pregnancy leave are entitled to a further 61 weeks’ of unpaid parental leave. All other new parents (which include fathers and adoptive parents) are entitled to take up to 63 weeks’ of unpaid parental leave. Again, eligible parents include full-time, part-time, and contract employees.

    Employees on leave have the right to continue participation in certain benefit plans and continue to earn credit for their length of employment, length of service, and seniority. In most cases, employees must be permitted to return to their pre-leave position at the end of the leave.

  • Compulsory Terms
  • There are no compulsory terms which must be included in an employment agreement. However, where the terms of the employment agreement do not meet certain minimum statutory standards set out in the Employment Standards Act, the court will impose, at the very least, the minimum standards prescribed by that legislation.

  • Non-Compulsory Terms
  • The employer and the employee are free to agree to any terms in the contract of employment, again provided that the contract meets the minimum standards prescribed by the Employment Standards Act and provided that such terms are not contrary to public policy.

Types Of Agreement

Employees may be employed pursuant to a fixed-term contract or an indefinite-term contract. Fixed-term contracts terminate automatically on a pre-determined date or lasts for the duration of a specific task or specified event. Under an indefinite-term contract, the employee is employed indefinitely, subject to termination by one of the parties.


The common law imposes on employees’ certain obligations to protect intellectual property and other confidential information belonging to the employer.

All employees are under an implied obligation at common law not to disclose an employer’s confidential information which was acquired during the employment relationship. This confidential information may include client lists and trade secrets but would not include information of a trivial nature or information which is accessible to the public.

Employers may require employees to enter into confidentiality agreements which create additional obligations on employees.

Ownership of Inventions/Other Intellectual Property (IP) Rights

Federal legislation governs intellectual property rights in Ontario. The federal Copyright Act provides that, in general, works made by employees under a "contract of service" in the course of employment are deemed to be owned by the employer.

With respect to inventions, the federal Patent Act does not contain any specific provisions regulating the ownership of an invention or potential patents in an employment relationship.

Generally, an employee will own his or her own invention unless there is a contractual duty to transfer the invention to the employer. In the absence of a written employment agreement, the key factor in determining ownership of the invention is whether the employee’s duties and responsibilities include an obligation to invent. If so, the employer is deemed to own the invention. Alternatively, if the invention has no connection to the employee's duties, the invention typically will be deemed to be owned by the employee.

Employers may require employees to enter into agreements which stipulate that any works (including software) developed or created during the employee's tenure are deemed to be assigned to, and owned by, the employer.

Pre-Employment Considerations

The Ontario Human Rights Code prohibits the use of any employment application form or a written or oral inquiry that directly or indirectly classifies an applicant on the basis of a prohibited ground of discrimination.

Pre-employment background checks are permissible in Ontario. However, criminal background checks can raise human rights and privacy issues for employers. If employers are going to discriminate on the basis of a prohibited ground, they must be able to prove it was based on a bona fide occupational requirement for the job.

The Human Rights Code prohibits pre-employment drug and alcohol testing. Drug and alcohol addiction are disabilities under the Code and must be accommodated by the employer up the point of undue hardship.

Hiring Non-Nationals

Federal immigration laws apply in Ontario. Non-nationals often require a work permit to legally work in Canada.

However, under certain free trade agreements, certain workers do not require a work permit. Some of these workers include temporary workers such as students working on campus, performing artists, military personnel, diplomats and official representatives, air show performers, rodeo contestants, members of a traveling circus, athletes and coaches, convention organizers, news reporters and their crews, correspondents, journalists, clergy, guest speakers, expert witnesses, civil aviation inspectors, health care students, foreign crew members and emergency service providers.

It is the employer’s responsibility to ensure that the employee is legally entitled to work in Canada.

Hiring Specified Categories Of Individuals

Children under the age of 14 may not be employed.

Under the Human Rights Code, an employer may not refuse to employ, or refuse to continue to employ, any person because of age, ancestry, citizenship, ethnic origin, place of origin, creed (religion), disability, family status, marital status (including single status), gender identity, gender expression, record of offences, sex (including pregnancy and breastfeeding) and sexual orientation unless there is a bona fide occupational requirement, meaning a requirement that is necessary for the performance of the job. The requirement must be essential to the performance of the employment duties and its absence must be impossible for the employer to accommodate without undue hardship.

Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Subject to the terms of collective bargaining agreements or employment contracts, there are no specific rules with respect to outsourcing and/or sub-contracting.

Changes To The Contract

The employer may not unilaterally alter the fundamental terms of an employee’s employment contract unless the employee consents to, or unless the employee is given reasonable notice of, the change.

Change In Ownership Of The Business

The general principle at common law is that upon the sale of an employer’s shares, there is no change in the corporate identity of the employer and, therefore, no resulting termination of employment of the existing employees. However, upon the sale of an employer’s assets, there is generally a change of corporate employer and, therefore, a resulting termination of employment of the employees.

There is an exception to this principle in the Employment Standards Act. The legislation provides that if an employer sells a business or part of the business and the purchaser employs the employee, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of the employee’s statutory entitlements. That is, the employee’s employment with the seller is deemed to have been employment with the purchaser for the purposes of the statutory entitlements.

In unionized settings, if all or part of a business or undertaking is sold, leased, transferred, or merged with another business or undertaking, the purchaser becomes the successor to and bound by any collective bargaining agreements applicable to the business as if it were party to the collective agreement.

Social Security Contributions

Both employers and employees are required to make Canadian Pension Plan and Employment Insurance contributions at source. The employer remits these contributions directly to the federal government.

Accidents At Work

The Workplace Safety and Insurance Act provides benefits, compensation and return-to-work services to eligible employees who have been injured while in the course of employment. Typically, a worker in Ontario cannot sue his or her employer in Ontario if that individual is insured by the Workplace Safety and Insurance Board. The legislation limits liability for employers covered by the legislation.

In addition, the Occupational Health and Safety Act protects workers from workplace health and safety hazards. The legislation sets out duties for all workplace parties and rights for workers.

Discipline And Grievance

In a non-unionized context, there are no statutory rules respecting discipline. However, an employer’s discipline procedure and sanctions cannot violate the Human Rights Code or breach the minimum standards prescribed under the Employment Standards Act. It should be noted, for example, that the Employment Standards Act prohibits employers from asking or requiring their employees to take a lie detector test.

An employer’s ability to discipline, including to suspend the employee without pay, will depend on the terms of the employment agreement.

In a unionized context, the discipline and grievance process are typically set out in the collective bargaining agreement, which is binding on both the employee and employer.

Harassment/Discrimination/Equal pay

The Occupational Health and Safety Act prohibits workplace harassment. In Ontario, any course of “vexatious conduct against a worker in a workplace that is known, or ought reasonably to be known, to be unwelcomed” constitutes workplace harassment, as does sexual harassment.

The Occupational Health and Safety Act requires employers with 5 or more employees to develop written policies with respect to workplace harassment and to review those policies at least once a year. An employer must also develop and maintain programs to implement the policies and to deal with complaints of workplace harassment.

The Human Rights Code protects employees from discrimination in employment on the basis of prohibited grounds, which are: age, ancestry, citizenship, ethnic origin, place of origin, creed (religion), disability, family status, marital status (including single status), gender identity, gender expression, record of offences, sex (including pregnancy and breastfeeding) and sexual orientation.

Under Ontario's laws, "pay equity" is different from "equal pay for equal work". Pursuant to the Employment Standards Act, an employer cannot pay one employee at a rate of pay less than another employee because of sex when they perform substantially the same kind of work, their work requires substantially the same skill, effort and responsibility and their work is performed under similar working conditions. Under Ontario's Pay Equity Act, the employer must assess all jobs in its organization and do a comparison of the work done by women to the work done by men, with a view to determining whether the women are being compensated equitably. The Pay Equity Act requires an employer to compensate work done by female job classes at least equally to work done by comparable male job classes.

Compulsory Training Obligations

Under the provisions of the Occupational Health and Safety Act, an employer has an obligation to instruct, inform and supervise workers to protect their health and safety. Such employers are also required to appoint competent persons as supervisors in the workplace. These supervisors must be qualified through knowledge, training, and experience to organize the work and its performance, as well as know about any actual or potential danger to health and safety in the workplace. Employers are under a positive obligation to inform their employees about any hazard in the work and to train such employees in the handling, storing, using, disposing and the transporting of any equipment, substances, tools, and material.

Offsetting Earnings

Offsetting an employee’s earnings against the employee’s debts by the employer is not permitted at common law unless the employee explicitly consents in writing. However, set-off is permitted under the Ontario Employers and Employees Act, if the set-off does not exceed the employee’s claim for wages.

Payments For Maternity And Disability Leave

There is no requirement for employers to continue the salary of an employee who takes maternity or disability leave. However, employers must maintain the employee’s regular benefits while the employee is on the leave. The federal government provides certain maternity and disability benefits to employees who qualify under the federal Employment Insurance Act. These benefits are paid directly by the government, but both employees and employers contribute to the benefit fund.

Compulsory Insurance

Pursuant to the Workplace Safety and Insurance Act, employers in Ontario covered by the legislation who employ workers (including family members and sub-contractors) must register with the Workplace Safety & Insurance Board within 10 days of hiring their first full or part-time employee to arrange coverage. If the employer is covered by the legislation, participation is mandatory.

Absence For Military Or Public Service Duties

An employee in Ontario who has worked for the employer for at least six months is entitled to a leave of absence without pay for reservist leave. The employee must be absent from work because:

    1. the employee is deployed to a Canadian Forces operation outside Canada; or
    2. the employee is deployed to a Canadian Forces operation inside Canada that is or will be providing assistance in dealing with an emergency or with its aftermath, or other prescribed circumstances apply.

With respect to jury duty, employers are required by the Employment Standards Act to allow employees time off to attend jury selection and to serve as jurors. However, there is no requirement that employers pay their employees lost wages while they serve on a jury.

Works Councils or Trade Unions

All labour unions must be certified with the Ontario Labour Relations Board. Once certified, the union becomes the exclusive bargaining agent for all employees in the bargaining unit, whether they are members of the union or not. The employer cannot settle wages, working conditions or other employment matters directly with the employees.

The formation of unions and the process by which they may become certified bargaining agents are governed by the Labour Relations Act. It is an unfair labour practice for employers to attempt to interfere with the formation or selection of a union.

Employees’ Right To Strike

Unionized employees may only strike under certain conditions. For strike activity to occur, the collective agreement must have expired, or the union and the employer must be negotiating a first collective agreement. In addition, the union and employer must have met with a conciliation officer appointed by the Minister of Labour, Training and Skills Development, reached an impasse and received a “no-board” notice or a notice of a conciliation board's report. The union must wait until the 17th day after the day the no-board notice is released (or wait until the 10th day after the day a conciliation board's report is released) and then hold a strike vote. The majority of the votes must be in favour of going on strike.

Certain categories of employees are never entitled to strike. For example, employees of hospitals and nursing homes do not have the right to strike as their services are deemed necessary and essential. Instead, the union and employer must submit their unresolved bargaining issues to binding arbitration.

Employees On Strike

The employer cannot legally dismiss employees who are on a legal strike unless they have engaged in misconduct which amounts to just cause for dismissal.

Employers’ Responsibility For Actions Of Their Employees

Employers in Ontario are vicariously liable for the acts of an employee when the employee acts in the course of employment.

Procedures For Terminating the Agreement

Subject to what is contained in the written employment agreement itself, there is no specific procedure for terminating the employment agreement. However, if an employee has been continuously employed for three months or more and the employer wishes to give the employee working notice of termination, the notice must be in writing.

Under Ontario law, there are special rules for mass terminations where the employer seeks to terminate 50 or more employees within a four-week period. When a mass termination occurs, the employer must submit a prescribed form to the Director of Employment Standards. Any termination notice to the affected employees is not effective until the form is received by the Director.

If there is an interruption in the employee’s wages at any time, the employer must issue a Record of Employment.

Instant Dismissal

An employer can terminate an employee without notice if the employee’s conduct amounts to “just cause” for termination.

Conduct constituting “just cause” is conduct incompatible with the employment relationship. It includes serious dishonesty, such as fraud and theft, serious breach of trust, subordination which is not trivial, or engaging in sexual harassment or violence in the workplace.

In Ontario, even where there is just cause for dismissal, an employer must still provide the dismissed employee with termination pay in lieu of notice, severance pay and benefit continuation as required under the Employment Standards Act, unless the employee has engaged in wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.

Employee's Resignation

An employment agreement can be terminated by the employee’s resignation. There are no legislative provisions requiring the employee to give any notice to the employer. However, a notice period may be stipulated in the employment agreement.

In the absence of an express agreement respecting an employee’s notice, the employee is obliged to give the employer reasonable advance notice of resignation at common law. In virtually all cases, this notice will be substantially less than the notice period which would be required of the employer in the event of a dismissal.

Termination On Notice

An employer can terminate an employment agreement on notice. This notice cannot be less than the minimum notice set out in the Employment Standards Act.

In addition, at common law, there is an implied term that the employee will be provided with reasonable notice of termination, which is often greater than the statutory notice. This implied term can be replaced by a contractual provision.

An employee who is terminated for just cause is not entitled to notice unless the employee has not also engaged in wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. In that case, the employee will only be entitled to the minimum notice under the Employment Standards Act.

The reason for which the employer dismissed the employee cannot be, even in small part, for a discriminatory reason, and must comply with the Employment Standards Act and the Human Rights Code.

Termination By Reason Of The Employee's Age

Generally, it is a violation of the Human Rights Code to dismiss an employee on the basis of age. However, if the employer can show that there is a bona fide occupational requirement for the age restriction, the dismissal will be permitted and will not constitute discrimination.

Automatic Termination In Cases Of Force Majeure

An employment agreement will terminate automatically in cases of force majeure, without notice. True instances of force majeure are rare.

An employment contract is “frustrated” when surrounding circumstances make it impossible for the parties to perform the employment contract, through no fault of either party.

Disability cannot be the basis of a frustrated contract under the Employment Standards Act.

Collective Dismissals

Under the Employment Standards Act, if more than 50 employees will be terminated at the employer’s establishment in a four-week period because of the permanent discontinuance of all or part of the business, the employer must first give notice to the Director of Employment Standards by its prescribed Form 1. If the form is delivered late, the employer will lose credit for any statutory working notice that is given prior to the form being delivered.

Enhanced notice of termination must also be given to the dismissed employees. Unlike an ordinary termination, the length of notice required in a mass termination depends on the number of employees who will be terminated and not on the individual employees’ years of service.

In addition, statutory severance pay is ordinarily only payable by employers with a payroll of $2.5 million or more. However, employees with five or more years of service who are dismissed are entitled to severance pay even if the employer does not have a payroll of $2.5 million or more.

The mass-termination rules do not apply if the number of terminated employees is not more than 10 per cent of the employees who have been employed for at least three months at the establishment and the terminations are not caused by the permanent discontinuance of all or part of the employer's business.

Termination By Parties’ Agreement

The parties can terminate the employment agreement by mutual consent at any time.

Directors Or Other Senior Officers

There are no separate legal rules for dismissing directors or senior officers from employment. Directors, in their capacities as such, may only be removed from the board in accordance with company law, which often requires a vote of shareholders.

Senior officers are often fiduciaries and may have post-termination obligations to the employer under the common law, including the obligation not to solicit customers of the employer for a reasonable period of time.

Special Rules For Categories Of Employee

Under Ontario law, all employees owe their employers a duty of honesty, loyalty, and good faith.

However, “fiduciary” employees have a higher duty of loyalty to the employer. It is the obligation of fiduciary employees, who have been entrusted with information and discretion to potentially adversely affect the employer’s interests, to always act with a view to the best interests of the employer. The common law also imposes certain restrictions on the fiduciary employees’ post-employment, even where there is no written employment contract or other agreement.

Specific Rules For Companies in Financial Difficulties

The Ontario Business Corporations Act may make the directors of a corporation jointly and severally liable to employees of the corporation for debts not exceeding six months wages which become payable while they are directors.

The federal Wage Earner Protection Program Act provides compensation to workers who are owed unpaid wages or other forms of compensation by employers who have declared bankruptcy or are subject to a receivership. The Wage Earner Protection Program reimburses eligible workers for unpaid wages, vacation pay, severance pay, or termination pay they are owed when their employer refuses or neglects to pay such monies as a result of bankruptcy or receivership, up to a maximum amount.

Restricting Future Activities

Ontario law favours free competition. There are therefore few restrictions placed on the future activities of a departing employee.

At common law, all departing employees have a continuing obligation not to disclose confidential information belonging to the former employer.

Non-competition and non-solicitation agreements must be clear and reasonable to be enforceable. Enforceable non-competition agreements must be sufficiently limited in both geographical scope and time. Non-solicitation agreements are easier to enforce, but again only in circumstances where they are non-ambiguous and subject to a reasonable time restriction.

Any employee who owes a fiduciary duty to the employer will also be prevented from soliciting the employer’s clients for a reasonable period of time.

Whistleblower Laws

The Occupational Health and Safety Act protects employees who disclose unsafe practices or health concerns.

Individuals and corporations are encouraged to report securities-related misconduct under Ontario’s Securities Act. That legislation provides for a civil cause of action for whistleblowers who experience a reprisal for providing information to the Securities Exchange Commission.

The federal Criminal Code protects whistleblowers who disclose information to authorities regarding criminal activity by their employers.

Special Rules For Garden Leave


Severance Payments

Under the Employment Standards Act, termination pay (i.e., payment in lieu of notice) is distinguished from severance pay (i.e., compensation for loss of seniority). Subject to the mass termination exception, a dismissed employee is only entitled to statutory severance pay if the employee was employed for five years or more and if the employer has a payroll of more than $2.5 million.

In common parlance, however, the term “severance” commonly refers to not only compensation for an employee’s loss of seniority, but also a payment in lieu of reasonable notice at common law. Thus, a “severance package” will include statutory termination and severance pay, as well as common law pay in lieu of notice, and other benefits and perks.

At common law, an employer is liable to an employee for damages for wrongful dismissal if the employer dismisses the employee without notice and without “just cause”. The amount of this payment is related to several factors, the principal ones being i) length of service, ii) the employee’s age, iii) the nature of the position, and iv) the employee’s ability to find alternative employment.

Special Tax Provisions And Severance Payments

Severance payments are generally considered to be income and are subject to the customary taxation, unless they are identified as “retiring allowances” under the federal Income Tax Act, in which case there may be a lower percentage of tax withholding.

General damages are non-taxable. To characterize an amount as general damages, there must be an element of the damages suffered by the former employee that is separate from the damages suffered as a result of the loss of their employment. General damages are intended to compensate the employee for personal injury, such as pain and suffering, mental distress, or human rights violations which occurred during employment.

Amounts paid by an employer to an employee for the purposes of re-employment counselling are not considered a taxable benefit and are therefore non-taxable.

Allowances Payable To Employees After Termination

Under the Employment Standards Act, an employer is required to continue making its regular benefit contributions to maintain the terminated employee's benefits until the end of the statutory notice period, provided that the employee has not engaged in wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.

At common law, an employee who has been terminated can seek to recover not only the loss of income the employee would have likely earned over the reasonable notice period, but also the loss of benefits as well.

Time Limits For Claims Following Termination

Claims for wrongful dismissal in the civil courts must be brought within 2 years after the employee is dismissed.

Human rights applications must be filed with the Ontario Human Rights Tribunal within one year of the discriminatory incident, or within one year of the last incident in a series of incidents.

Specific Matters Which Are Important Or Unique To This Jurisdiction

Implied Reasonable Notice Term

Similar to other provinces, Ontario does not have “at will” employment. There is an implied term in every contract of employment, whether oral or written, that the employee will be provided with reasonable notice of termination.

Prohibited Testing

Random drug and alcohol testing are not generally permitted in Ontario. Testing of an individual employee may be allowed in specific cases where there are reasonable grounds to believe the employee is impaired by drugs or alcohol while on duty in a safety-sensitive position, or is unable to work safely due to impairment from alcohol or drugs.

In addition, Ontario employers are not permitted to ask or require employees to submit to a lie detector test.

Leaves of Absence

Employees have access to several different lengthy leaves of absence under the Employment Standards Act. The leaves are unpaid by the employer, but in many instances federal Employment Insurance benefits are available.

During the leaves, an employer must maintain the employee’s benefits and length of service continues to accrue. Statutory leaves are job-protected and the employee is entitled to return to the pre-leave position upon returning to work.

Among other leaves, Ontario offers Pregnancy (up to 17 weeks), Parental (up to 61 weeks for birth mothers and 63 weeks for other parents), Family Medical (up to 28 weeks), Critical Illness (up to 37 weeks of unpaid leave for a child and 17 weeks for an adult), and Crime-Related Child Disappearance of Death (up to 2 years for each leave).

Domestic Violence in the Workplace

Ontario’s Occupational Health and Safety Act requires employers to take every precaution reasonable for the protection of the worker if, among other circumstances, the employer becomes aware, or ought reasonably to be aware, that domestic violence which would likely expose a worker to physical injury may occur in the workplace.

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Deborah A Howden
Shibley Righton LLP


© 2021, Shibley Righton LLP. All rights reserved by Shibley Righton LLP as author and the owner of the copyright in this chapter. Shibley Righton LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021