Top 10 Employment Law Developments In 2019

2019 brought many interesting legislative and judicial developments in employment law. We outline 10 of the key developments below.

1. Continued scrutiny of failsafe clauses in termination provisions

   In Andros v. Colliers Macaulay Nicolls Inc., the Court of Appeal for Ontario found a termination clause to be unenforceable because it failed to provide entitlement to the minimum notice, severance, and benefits entitlements under the Employment Standards Act, 2000 (ESA)1. The Court put an emphasis on grammar and sentence structure in interpreting a failsafe provision. The fatal flaw in the provision was its placement in the middle of the termination clause, and how it split up the failsafe with the other options laid out in the termination clause. Because of this “split”, the clause was considered both ambiguous and offside the ESA. The Court took a consistent approach to its 2018 decision in Amberber v. IBM Canada Ltd., which emphasizes the importance of having the failsafe provision at the end of a termination clause in order for the failsafe to extend to the entire clause2. More recently, in Rossman v. Canadian Solar Inc., the Court of Appeal adopted the Andros approach to failsafe provisions and again emphasized the importance of clarity in termination clauses for employees during their moments of stress and uncertainty3.

2. No presumptive entitlement to discretionary bonus during notice period

   In Manastersky v. RBC Dominion Securities, the Court of Appeal for Ontario set aside the damages awarded by the trial judge for a terminated employee's lost opportunity to continue to earn compensation under a discretionary profit-sharing plan during the employee's notice period4. The Court held that the trial judge erred by concluding that the employee was presumptively entitled to common law damages in respect of the plan merely because the payments under it had previously constituted a significant form of compensation to him. It held that the trial judge should have instead considered what the employee would have earned in respect of the plan had the employer not breached the contract of employment, which required a “case-specific” analysis of the employee's eligibility under the terms of the plan during the notice period.

   Using this case-specific approach, the Court upheld an employee's entitlement to incentive plan compensation during the notice period in other cases, including in O'Reilly v. IMAX Corporation5.The Supreme Court of Canada is expected to consider whether employees are entitled to incentive plan compensation during the notice period in 2020, in Ocean Nutrition Canada Ltd. v. Matthews6.

3. Bona fide resignation restarts the clock on length of service—even when rescinded

   In 2019, the Court of Appeal for Ontario clarified the consequences ofresignations. In Theberge-Lindsay v. 3395022 Canada Inc., the Court held that the employer's acceptance of the employee'sunequivocal resignation restarted the clock on length of service for the purposes of determining entitlements under the ESA, even though the employee subsequently rescinded her resignation during her notice period and continued her employment7. The Court determined that when the employee was subsequently terminated without cause in 2012, the employer was required to provide notice measured from the date on which the employee was rehired. In another case addressing resignations, Ariss v. NORR Limited Architects & Engineers, the Court of Appeal for Ontario held that the employee's resignation (and waiver of length of service and corresponding entitlements) as a pre-condition for transitioning towards part-time hours did not restart the clock on length of service for the purposes of determining...