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COVID has upended the Canadian labour market. While some industries have been partially or fully shut down, others have experienced exponential growth. This has resulted in opposite forces, in which several employees are shedding staff, while others are continuing to hire.

Given the ongoing shifts to the labour market, we thought we would respond by reviewing some key terms in most employment contracts.

Specifically, and below, we address specific circumstances and clauses that employees would be wise to review in their employment contracts (whether existing or new).

Temporary Layoffs

A lay-off is a temporary termination of employment. It also contemplates a return to work when circumstances improve.

Employers do not have an automatic right to lay off employees, either under the common law or the Employment Standards Act in Ontario. Therefore, if an employer wants to have the right to lay-off an employee, then it is important that they make it a clear term of the employee’s contract. A court will also almost certainly expect that the matter was fully brought to the attention of the employee prior to the employee signing off on the contract.

If lay-off is not determined to be an agreed-upon term, then an employee may be able to successfully argue that their employer has constructively dismissed them. If an employee can successfully argue that their employment has been terminated, then they could be entitled to a range of remedies including substantial severance pay to assist in transitioning to alternative employment.

If an employer is concerned that they may need to lay-off an employee during their employment, then they should consider including language in the employee’s contract that may assist them in later arguing that layoff formed part of the terms of the employee’s employment contract and that as a result, no constructive dismissal took place when the employer laid the employee off.

Termination Clause

An employee’s entitlements on termination is probably the most divisive issue in employee-employer disputes.  Specifically, the common law provides employees with the right to be provided with severance and termination pay. The amounts can be significant depending on factors such as the employee’s age, specialization, and years of service.

A termination clause within an employment contract can allow an employer to reduce an employee’s right to severance payments to support the employee in transitioning to new employment. Courts have made it clear that clauses intended to reduce an employee’s right to termination pay must be clear and unequivocal. The reason being the amount that an employee can lose as a result of a restrictive termination clause can be significant.

Given the courts’ strict interpretation of termination clauses, employees would be wise to have counsel review the related language within their employment contract before accepting a termination package. This is because courts regularly deem termination clauses unenforceable for a range of reasons, including insufficient consideration or a deemed lack of clarity in the wording of the contract. Such a finding can lead to a court determining that an employee is entitled to compensation for wrongful dismissal.

Home Office

With many employees working from home, employers may increasingly include clauses within contracts or accompanying policies relating to expectations for remote work. This may include details relating to reporting structures, hours of work (and on-call response time) and tools/supplies (software, screens etc.). Employers may also include details relating to health and safety protocols to account for longer-term work-from-home reality. Employees would be wise to review these policies to ensure they align with their rights both under employment standards and human rights legislation. Specifically, employees have a range of rights relating to leave of absences and the right to be accommodated for matters such as family obligations.

Hours of Work

Given the movement to remote work, many employees are working alternative hours. Employers should consider the specific needs of the business and define expectations when it comes to employee availability/hours of work as part of the employment contract.

Employees should anticipate and consider possible human rights implications associated with setting specific hours of work in an age when many employees are having to balance childcare and work responsibilities.

If you have questions about existing or new employment contracts and require advice on how to ensure your rights are preserved in the time of COVID-19, whether in relation to termination, wrongful dismissal or otherwise, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email at mlahert@sultanlawyers.com.


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