Employment Update
By Martin U. Wissmath and Cameron A. Axford Jan 2025 Charity & NFP Law Update
Published on January 30, 2025
8.1. Ontario Court of Appeal Affirms Invalidity of Termination Clauses Failing ESA StandardsThe Ontario Court of Appeal has affirmed a lower court decision declaring an employment contract’s termination clauses unenforceable for failing to comply with the Employment Standards Act, 2000 (ESA). In Dufault v Ignace (Township), released December 19, 2024, the Court of Appeal upheld the finding that the employer’s “for cause” termination clause violated the ESA by defining “cause” too broadly. Specifically, the clause allowed termination without notice or pay for conduct that did not meet the ESA’s narrow “wilful misconduct” standard, stated in Ontario Regulation 288/01: Termination and Severance of Employment. For further information on the lower court decision, please see the March 2024 Charity & NFP Law Update. Following its landmark ruling in Waksdale v Swegon North America Inc., the Court of Appeal confirmed that termination clauses in employment contracts must be read as a whole. If any provision violates the ESA, the entire termination clause is invalidated and unenforceable. That could leave termination payments in lieu of reasonable notice owed to employees to be calculated according to the common law, which in many cases is significantly higher than the ESA minimums. Although the termination in this case was “without cause,” the unenforceability of the “for cause” clause rendered all termination provisions in the contract void. The court rejected the employer’s argument that the “for cause” clause could be severed to save the “without cause” clause, reiterating that Waksdale remains binding precedent. The Court of Appeal also emphasized key principles from employment law: the ESA is remedial legislation intended to protect employees, and courts will interpret contracts in a way that encourages employer compliance with statutory minimums. Employers cannot rely on post-termination compliance with the ESA to remedy clauses that were unlawful when drafted. This ruling underscores the importance of precise drafting in employment contracts. Employers, including for charities and not-for-profits, must ensure that termination provisions strictly adhere to ESA standards, as even minor non-compliance can result in significant liability. The case reaffirms that courts will not salvage non-compliant provisions and signals to employers the importance of reviewing contracts to avoid potentially costly disputes 8.2. Long-term Illness Leave and Placement of a Child Leave added to Employment Standards ActOntario workers will soon benefit from expanded leave entitlements under the Employment Standards Act, 2000 (ESA), as a result of Bill 229, the Working for Workers Six Act, which received Royal Assent on December 19, 2024 (the “Act”). The Act introduces two new unpaid leave provisions: Placement of a Child Leave and Long-term Illness Leave. Other updates in the Act address occupational health and safety, immigration standards, and traffic safety, marking a comprehensive effort to enhance workplace protections across the province. The ESA changes provide expanded leave rights for employees. Placement of a Child Leave entitles workers who have been employed for at least 13 weeks with the employer up to 16 weeks of unpaid leave when a child is placed in their care for adoption or under specific surrogacy arrangements. Additionally, Long-term Illness Leave allows employees up to 27 weeks of unpaid leave if they are unable to work due to a serious medical condition, supported by a certificate from a healthcare practitioner. The Placement of a Child Leave provisions will take effect six months after Royal Assent, on June 19, 2025, while the Long-Term Illness Leave provisions will come into force on a date to be proclaimed by the Lieutenant Governor. Employers should act promptly to update workplace policies to be compliant with these revised ESA standards. 8.3. New Regulation Requires Employers to Provide Employment Information Before Work BeginsOntario Regulation 477/24 (the “Regulation”), made under the Employment Standards Act, 2000 (ESA), mandates employers to provide written employment details to employees before their first day of work. Published in The Ontario Gazette on December 14, 2024, the Regulation requires employers with 25 or more employees to provide the employer’s legal name, contact details, initial workplace, pay rate, pay schedule, and expected hours of work. The Regulation comes into force on July 1, 2025. Charities and not-for-profits with 25 or more employees should review their onboarding practices to ensure compliance, as changes to Ontario employment law continue to promote greater transparency in employment relationships. |