The Blog

A recent case dealt another blow to the utility of “saving clauses” to rectify drafting errors in employment contracts. The Court in Groves v. UTS Consultants Inc. found a clause ostensibly supplanting the employee’s right to reasonable notice of termination was unenforceable and the intention to contract out of the common law was not salvaged by a saving clause that would have limited the employee to Employment Standards Act (Ontario) minimum notice.

Using independent contractors instead of employees can be a high stakes game. A recent case was doubtless a nail-biter for one employer, which narrowly avoided an expensive tax bill. MWW Enterprises Inc. v. M.N.R. provides a nice example of how courts approach the distinction between independent contractors and employees in tough cases.

A recent Human Rights case highlights the vastly different remedies available to employees in the Human Rights system versus the civil courts. After a 13-day hearing, the complainant in Pratt v University of Alberta received:

• compensation for 18 months’ lost wages, well exceeding pay in lieu of reasonable notice;
• general damages, including for mental distress; and
• reinstatement to a new position.

Companies generally don’t want to pay their dismissed employees bonuses that accrue after the termination date. But drafting policies to achieve that is easier said than done. The recent Ontario Court of Appeal decision Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512, provides an important example of a policy that was effective in limiting the dismissed employee’s entitlement to bonus.

Workplaces are dynamic and workplace policies must evolve. However, effectively amending a workplace policy so that it is enforceable in court is not as straightforward as one might think. Changes to company policies can affect employee rights, benefits, or entitlements. For those changes to become enforceable elements of employment contracts, employers may have to provide their employees with consideration.

Employers sometimes require their employees to sign restrictive covenants, prohibiting competition or solicitation of clients after the termination of employment. Such restraints can make it difficult for employees to secure alternative work. The question often arises: How do restrictive covenants affect an employee’s entitlement to notice of termination? Recent case law from Alberta and Ontario confirms the presence of non-competition and non-solicitation covenants sometimes justifies lengthened notice periods, even if the covenants eventually prove unenforceable.