Employee compensation is a fundamental aspect of employment law, both during and after employment. Employers must properly pay out any wages, salaries, commissions, etc., validly owed to the employee. Employers cannot knowingly refuse to pay out their employees, as it would likely be considered a breach of the employment contract. This can lead to significant punitive damages, as seen in Giacomodonato v. PearTree Securities Inc., 2023 ONSC 3197.

In this post, we will discuss the importance of carefully considering the terms of the employment agreement as it relates to termination. In particular, it may involve terms for paying out employees that an employer is obligated to fulfill. We will also discuss circumstances where a court may order punitive damages, which are often unavailable. We will also examine the Giacomodonato case, in which the court ordered the employer to pay $10,000 in punitive damages for knowingly failing to pay out the employee. 

This post will provide key takeaways for employers and employees where there may be a termination and amounts owing to the employee. 

Carefully Consider the Terms of the Employment Agreement For Termination

The termination clause is one of the most important parts of an employment agreement. It is important to note that employers cannot contract outside of the minimum employment law standards set by legislation. In particular, upon termination, the employee must at least receive the minimum compensation set out in the Employment Standards Act. In some cases, if a termination clause is too broad or ambiguous, the termination clause may be invalid and, therefore, unenforceable. Due to this, it is important to consider the termination clause carefully.

Under the employment contract, the employee may also be entitled to compensation beyond their salary, such as commission, bonuses, or overtime pay. These forms of compensation are usually set out in the employment contract, and it is important to have clear terms on when these entitlements are available and how they are calculated. If there are any changes to the bonus or commission structure, it is often helpful to have this set out in writing in case of any dispute. If the matter moves to court, the judge will look to the employment contract terms to make its determination. 

Compensation During Notice Period 

Employees are entitled to a notice period or pay in lieu when they are terminated. During the notice period, employees may be entitled to compensation other than salary, such as benefits, commissions, or bonuses. Under the Employment Standards Act, employees are entitled to stay on their employer’s benefits plan during notice. Benefits can include medical and dental, disability coverage, pension and RRSP contributions, life insurance, vacation pay and more. If the employee’s plan is cancelled before the end of their notice period, then the employer will need to cover the cost based on the employee’s duration of entitlement. 

Employees may be entitled to other compensation, such as bonuses and commissions unless the employment contract terms exclude them. 

Also, depending on the employment contract, the employee may be entitled to additional severance pay beyond the reasonable notice period if they meet the criteria set out in the contract. 

When Are Punitive Damages Available For Wrongful Dismissal?

Punitive damages are only available in very limited circumstances. They are only available in exceptional cases where malicious, oppressive, or high-handed conduct warrants punishment based on the court’s assessment. The misconduct in question must significantly depart from ordinary standards of reasonable behaviour. In particular, the conduct may be described as harsh, vindictive, reprehensible and malicious. 

It is not enough to find that the plaintiff was successful in their claim. Punitive damages are available if there is an independent actionable wrong, including the employer’s breach of their implied duty of good faith and fair dealing. Suppose an employer fails to comply with the Employment Standards Act. In that case, they may be subject to punitive damages if their conduct rises to a level that deserves punishment, according to the court’s assessment of the circumstances. 

Overall, punitive damages are an exceptional measure and not necessarily available in all cases. There is a high standard to find that there was misconduct to warrant punitive damages. 

Court Orders $10,000 in Punitive Damages for Employer’s Failure to Pay Out Employee 

In the Giacomodonato case, the court ordered the employer to pay $10,000 in punitive damages to the employee for failure to pay out amounts owed to the employee. 

The employer had terminated the employee without notice in January 2018. However, at that time, the employer was aware that it still owed the employee a significant amount of compensation for the period of July 2016 to July 2017. There was also a second employment contract, and the employee was also entitled to some compensation from this second contract. 

Shortly after being terminated, the employee was asked to sign a certificate stating that he had not breached his restrictive covenants involving non-competition. However, the employee was not required to do so under any terms of the employment contracts, and he refused to sign. The employer concluded that the employee must have breached their covenants, even though there was no evidence of this. 

A few months later, the employer advised via letter that they would not continue paying the employee’s salary continuation payments under the second employment contract. In the letter, the employer set off the money owed against the money already paid. Also, the letter included a cheque with a term that the employee would give up all his entitlements to the amounts owed if he deposited the cheque. The employer explained that their actions arose from the employee’s refusal to sign the certificate. 

The court found no basis for the employer to take these steps in withholding or setting off amounts owed to the employee. The court noted that the employer abused their position of power in doing so. As a result, the court awarded the employee $10,000 in punitive damages. 

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

Employers and employees should carefully consider the termination clauses set out in the employment contract, as there are significant consequences if the clauses do not comply with legislative standards, including a potential wrongful dismissal claim. Employers may also be subject to punitive damages for failing to pay out amounts owed to the employee under the employment contract. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

After being terminated, an employee may claim wrongful dismissal. Depending on the claim, there may be certain documents that an employee may want to enter as evidence to support their claim that they were wrongfully terminated. However, these documents may contain confidential information about their employer, especially if they are employed by a corporation that deals with sensitive user data and information. Generally, employers have policies on the return of workplace information so that employees no longer have access to this confidential information after termination. 

This post will discuss what happens when an employee tries to use confidential workplace information in their wrongful dismissal claim. We will discuss the case Rae v. Ecolab Co., 2023 ONSC 5995, in which the court ordered the employee to return workplace documents that contained sensitive information to the employer. These documents were not permitted to be admitted as evidence. The purpose of this post is to provide critical takeaways for situations where an employee tries to include confidential workplace information in their wrongful dismissal claim.

Confidentiality Policies 

It is important for employers to have policies on how an employee handles sensitive and confidential information during their employment. These policies set clear expectations on how employees must treat confidential information during and after they leave the company. 

For example, the employer can mandate that key employees can only access certain information with the appropriate login credentials. The policy may also include procedures for when documents must be destroyed, including ways to appropriately handle their destruction. 

In addition, an employer should consider what types of electronic security are available to protect confidential workplace documents, as many records are now stored digitally. An employer can also consider including training that helps employees avoid common mistakes with computer usage, such as phishing and downloading documents without verifying the sender. 

Employers can also consider requiring an employee to sign a non-disclosure agreement. If confidential information is leaked despite a non-disclosure agreement, an employer may also be able to pursue a claim for breach of contract. 

When an employee is terminated, an employer must ensure that the employee no longer has access to confidential information after leaving the company. Sometimes this can be difficult, as in the Rae case below, in which an employee took confidential company information without the employer’s knowledge to use these documents in his wrongful dismissal claim. Luckily, the court can offer remedies for these types of situations, as we will discuss below. 

Employee attempts to enter confidential workplace documents as evidence in wrongful dismissal claim 

In the Rae case, an employee attempted to use confidential workplace documents as evidence in his wrongful dismissal claim. 

The employer was a global company in the water, energy, and hygiene technologies and services industry. The parent company was located in the US as a publicly traded company. In this case, the action was brought against the Canadian subsidiary of the company, which was not publicly listed. 

The employee worked with the company for 11 years, from 2009 to 2020. The employee was a Certified Public Accountant who worked as a controller for the employer. He was also a director for the company. He was dismissed without just cause and was provided 10 months of notice as the company decided to eliminate the finance department of the Canadian subsidiary. 

When the employee commenced his claim, he included some of the employer’s documents. He admitted that he had taken the documents without the knowledge of his former employer. He stated he intended to rely on them for his wrongful dismissal case. The employee claimed that the documents were relevant to his case. He also claimed that there was no breach of confidence, as he did not misuse the information obtained, and the documents should not be considered confidential, as the employer did not comply with its own Code of Conduct, which required their employees to maintain the confidentiality of workplace documents both during and after working with the employer. In particular, he claimed that he had not publicly disclosed confidential information and held private copies of the documents, which were stored on a secure site. He claimed that he took the documents because the employer acted in bad faith and did not follow their Code of Conduct. 

As a result of his role, the employee had access to confidential financial information of the company. In particular, he was responsible for reviewing, preparing, and finalizing the company’s tax returns. His role also involved directing the company’s accounting and financial control standards. Due to his high-level management role, he was one of four key individuals accessing this confidential information. He accessed confidential financial information from the Canadian subsidiary and the US parent company. 

In this case, the information was protected with a password, and each employee with access had unique login credentials that could not be transferred. 

In the employment contract and an additional agreement for management-level employees such as the plaintiff, there were also terms to maintain the confidentiality of workplace documents. The employer also had a Code of Conduct, which outlined that employees were never to use the company’s confidential or proprietary information for personal gain, whether during their employment or after they leave the company. Furthermore, the employee received yearly training concerning the Code of Conduct and computer security. 

Court orders employee to return confidential workplace documents 

The court ordered the employee to return the confidential documents to the employer. The court found that many documents taken included financial information that was not required to be publicly disclosed. This information included the sales revenues, cash flows, and debts of the company, as well as payroll information. 

The court found that the employment contract clearly stated that the employee was not to take confidential information out of the company after leaving. The contract stated confidential documents would include financial information about the company.  

As the information was the company’s property, the employee was ordered to return it. The court found that allowing the employee to use this information would be much more prejudicial to the employer than important to the employee’s case. The court found that it would be an abuse of process to allow the employee to use stolen documents for his benefit in litigation. Also, the court noted that the employee could have brought a motion for the employer to produce the records, which would have provided an opportunity to address relevance and confidentiality. The balance of convenience favoured the employer, and they were provided injunctive relief for the employee to return the confidential documents. 

Contact Haynes Law Firm in Toronto for Advice on Confidential Workplace Documents

It is essential for employers to carefully understand the role of confidentiality agreements and policies in the workplace, as employees often handle highly sensitive data and information. As this will depend on the specific circumstances of your case, our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from confidentiality in employment contracts. 

For employees, our goal is to ensure that they understand their rights and obligations under the employment contract. Haynes Law Firm also assists employers in avoiding liabilities that may arise from employment contracts and policies that do not adequately maintain the confidentiality of workplace documents. We are dedicated to finding the best resolution for you.

To book a consultation, please get in touch with us online or by phone at 416-593-2731.

The pandemic affected us in many ways, including radically shifting how work is performed. Now, it is much more common for individuals to work from home, which has led to a drastic change in work policies. There has been an increase in workers’ connectedness, as they can work through various devices. While this has made it more flexible for workers to perform work tasks, it can also lead to burnout if workers cannot disconnect outside of work hours. The line between one’s personal life and work life becomes blurred. The Ontario government has amended the Employment Standards Act to address this issue. Employers are now required to provide a right-to-disconnect policy to employees. 

In this post, we will discuss the right to disconnect from the new amendments to the Ontario Employment Standards Act. We will describe when the policy will apply and what obligations employers must fulfill to ensure they meet the standards. This post will provide key takeaways for employers seeking to understand their requirements under the amended legislation and will help employees understand their rights. 

What is the “right to disconnect” under the Ontario Employment Standards Act?

According to the Ontario Employment Standards Act, employers must provide a policy on disconnecting from work to their employees. 

Under the Act, disconnecting from work includes “not engaging in work-related communications, including emails, telephone calls, video calls or the sending or reviewing of other messages, to be free from the performance of work.“ From this provision, the Act covers a variety of electronic communication methods.  

Notably, the employer has no positive obligation to adopt a new right for employees to disconnect from work after work hours. However, those will be enforced if the disconnection policy provides further rights to the employee. If the policy offers fewer entitlements than as set out in the Employment Standards Act, then the rights in the Act will be enforced. 

Does the “right to disconnect” apply in your circumstances?

Generally, employers with 25 or more employees must provide their employees with a policy on disconnecting from work during non-work hours. 

The requirements for employers to provide a policy on disconnecting from work was enacted on December 2, 2021. During the early stages (i.e. in 2022), employers with 25 or more employees on January 1, 2022, were required to have a written policy on disconnecting from the workplace by June 2, 2022. 

Starting in 2023 and for the following years, employers with 25 or more employees on January 1 of that year must have their written policy on disconnecting from work available before March 1 of that year. In other words, they have approximately two months to prepare and distribute the written policy. Generally, all workers considered employees under the Act will be included in the employee count. This would also include the following types of workers: 

• Part-time or casual workers, regardless of how many hours they work
• Employees who have been laid off, so long as the employment relationship has not been terminated and/or severed
• Employees who are on a leave of absence
• Employees who are on strike or who are locked out.

The requirement for employers to provide a policy on disconnecting from work applies to all employers with employees covered by the Employment Standards Act. This requirement does not apply to Crown agencies, corporations, etc. 

Employers with multiple locations 

For employers with multiple locations, the 25-employee requirement will only include the number of employees working at all Ontario locations. For example, if an employer operates multiple Ontario locations with less than 25 employees each, but the total number of all employees at all the locations exceeds 25, then the requirement applies. 

What happens when the number of employees fluctuates throughout the year?

If the employer has over 25 employees sometime after January 1 of that year, they will not need to provide a written policy on disconnecting from work. For example, consider a scenario where an employer has 20 employees on January 1, 2023, but hires ten more employees during the middle of the year. In this scenario, the employer does not need to provide a written policy. However, if there are 25 or more employees by January 1, 2024, then they would need to provide a written policy. 

Consider the opposite scenario. If the employer has 25 or more employees at the start of January 1, 2023, but the number of employees decreases below 25 later that year, then the employer would still need to provide the written policy. If by January 1, 2024, the number of employees remains below 25, then the employer will not need to provide a written policy for 2024. 

Requirements for employers to provide a right to disconnect policy 

The employer’s written policy must cover the topic of “disconnecting from work,” which involves not engaging in work-related communications, including emails, telephone calls, video calls or sending or reviewing other messages, to be free from the performance of work. Note that this covers other communication methods beyond those listed. 

In their policy, employers are required to include:

• The date the policy was prepared, including day, month, and year
• The date of any changes made to the policy, including day, month, and year. 

The Act does not specify what information needs to be included or how long it should be. It is up to the employer to decide the content of the policy. 

The policy could provide wider rights than those in the Employment Standards Act. The case law surrounding the enforceability of such policies is developing, so it is important to consider whether these terms would be upheld as a contractual or common law entitlement beyond the minimum standards in the Act. 

When should the policy be provided to employees?

The written policy must be provided to employees within 30 days of being prepared and the policy being changed from an existing policy. If an employer already has a written policy, they are not required to develop a new one. If new employees are being hired, they must provide the policy to the new employee within 30 days of being hired. 

The employer can provide the policy in the following formats:

• a printed copy
• an email attachment if the employee can print a copy
• an online link to the document, given that the employee has a reasonable opportunity to access the document and a printer.

Key takeaways 

While the amended legislation does not require an employer to develop a new right to disconnect from work, employers still need to fulfill requirements regarding a written policy for disconnecting from work. It is important to remember that employees also continue to be covered by the Employment Standards Act, including standards on work hours, even if employees may not receive a greater benefit from a policy on disconnecting from work. 

Contact Haynes Law Firm in Toronto for Advice on Workplace Policies

In Ontario, there are new requirements for employers to provide a written policy on disconnecting from work, so it is important to consider the legal effects of such a policy carefully. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with employment contracts and policies. For employees, our goal is to ensure that they understand their rights under their employment contract and related policies. Haynes Law Firm also assists employers in avoiding liabilities where their employment contracts or workplace policies are not in line with legal requirements. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

Some employment contracts, including many for employees working in the tech industry, have a non-compete or non-competition clause. This means an employee cannot work for another similar employer, typically within a specific time frame. For instance, the employee may need help to work for an employer in the same field that has worked on similar technology for a year or more. Relatedly, there may also be confidential information that an employee cannot share with a new employer regarding any work or technology developed by the employee. However, the employee will need to take on new work eventually, and using one’s experience to find similar work may be beneficial.

We will discuss what happens when an employee accepts a new role with an employer that does similar work despite a non-competition clause. We will also examine a recent case, EF Institute for Cultural Exchange Ltd. v. WorldStrides Canada, Inc., 2023 ONCA 566, in which an employee was found not to have breached the non-competition clause and confidential information agreement terms after negotiating his new position with his former employer’s competitor. This will be helpful for both employees and employers in understanding non-competition clauses.

What is a non-compete or non-competition clause in an employment contract?

If an employee signs an employment contract with a non-compete clause, they cannot enter into a role that is in competition with their employer until a specified term ends. For example, the non-compete clause may expire at the end of the employee’s employment or a particular time afterward, such as one year. The non-compete clause may also specify that the employee may not work for an employer in a similar line of work in a specified geographical location or market.

The employee may be required to sign a separate non-compete agreement if the employment contract does not include a non-compete clause.

Generally, the employee is prohibited from sharing confidential information with a new employer.

Recent Ontario legislation prohibits non-competition agreements after October 25, 2021

More recently, Ontario passed legislation prohibiting non-competition agreements after October 25, 2021. This means that employers cannot ask Ontario employees to sign an agreement that prevents the employee from engaging in work that competes with the employer’s line of work after the employment contract ends. This prohibition covers restrictions on both time and geographical location. In other words, an employer cannot have a non-compete clause that limits the employee from seeking work from a competitor after a specified period or in a particular location or market.

However, as this legislation only applies to non-competition agreements and clauses that are entered into after October 25, 2021, the existing laws on non-competition clauses are still helpful as non-competition agreements may have been signed at the beginning of one’s employment, which may be before October 25, 2021.

Also, there are exceptions to this prohibition. Generally, non-compete clauses may still apply to company executives, such as a chief executive officer, president, chief operating officer, etc. The legislation does not cover employment agreements for executives.

Can you negotiate a new role before your non-compete clause expires?

It is possible to negotiate an interview for a new role with a competitor of one’s employer before the non-compete clause expires, but this should be exercised with caution. An employee may also need to sign an agreement regarding confidential information with an employer, and the employee needs to ensure they are not breaching the agreement during interviews or negotiations with a potential new employer if they compete with their previous or existing employer.

In a recent case, EF Institute for Cultural Exchange Ltd. v. WorldStrides Canada, Inc., the court found that the employee did not breach the non-compete and confidentiality agreements while interviewing and negotiating a new role with a competitor. Despite being a recent case, the non-compete clause was not prohibited by Ontario legislation as it was entered into before October 25, 2021, and the employee was president of the company.

In the EF Institute case, the employee worked for EF Institute since 2005 and was most recently employed as president of the company starting in 2011. He signed an employment agreement for his new role with a non-compete clause and terms restricting him from sharing confidential information about EF Institute. This was signed in 2012.

Later, the employee was dismissed without cause in 2014. His non-compete clause would expire by September 30, 2015, one year after the date of his severance agreement. One day after, on October 1, 2015, the employee began working for a competitor, WorldStrides.

EF Institute claimed that the employee breached the non-compete clause and confidentiality agreement by engaging in interviews and negotiations that led to an offer from WorldStrides while the non-compete was still in effect.

In April 2015, the employee attended an interview with WorldStrides employees and officers. The employee then provided copies of his employment and severance agreements, which included terms that the employee would abide by the non-compete and confidentiality terms.

By June 2015, the employee was verbally offered a general manager position with WorldStrides, beginning on October 1, 2015, after the non-compete term expired.

The court found that the employee did not breach his confidentiality requirements after reviewing the interview notes, email correspondence, and employee’s resume shared with WorldStrides.

EF Institute appealed.

On appeal, the court agreed with the motion judge that the employee never provided confidential information to WorldStrides during the interview and negotiations process. The court also found no evidence that the employee assisted WorldStrides with business before the non-compete expired. The appeal was dismissed.

Key takeaways

Despite the new Ontario legislation prohibiting non-compete clauses, these terms may still apply if they were entered into before October 25, 2021. Also, non-compete clauses can still apply to employees who are in executive roles. Therefore, it is essential to carefully review any non-compete terms in one’s employment agreement to ensure they are followed. If one is accepting a new role with a competitor during the non-compete period, this should be exercised with caution.

Contact Haynes Law Firm in Toronto for Advice on Non-Compete Clauses in Employment Contracts

Despite recent Ontario legislation prohibiting non-compete clauses, they still may apply to your employment. They may restrict you from working for certain employers for a period of time or within a particular location. As this will depend on the specific circumstances of your case, our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from non-compete clauses and confidentiality requirements in employment contracts. For employees, our goal is to ensure that they understand their rights and obligations under the employment contract. Haynes Law Firm also assists employers in avoiding liabilities that may arise from employment contracts that are not in line with legislation or case law. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online, or by phone at 416-593-2731.

It has become more common for restricted stock units (RSUs) to be an employee benefit in employment contracts. In particular, this has become more common for workers in the technology industry. RSUs can form a significant part of the employee’s total compensation package, and more employers are considering incorporating RSUs in employment offers beyond base salary and other benefits. 

This blog will discuss RSUs and how they may be structured in employment contracts. A recent case, Maynard v Johnson Controls Canada LP, 2023 ONCA 392, involved a terminated employee who claimed that he should receive the RSUs in his employment contract. Those offered RSUs as part of their compensation packages, and employers who want to know how to structure RSU terms so that they will be upheld in court will benefit from this post.

What are restricted stock units?

Since RSUs have become a significant component in an employee’s compensation package, especially for many tech workers, it is important to understand how they operate. 

RSUs are a form of compensation offered to employees. Employees are given company stocks that will vest sometime in the future if they meet certain conditions. If you meet the conditions, then the stocks will be vested, and the employee can sell or keep the stocks. Depending on the terms of the contract, the RSUs may not vest upon termination. 

With other stock options, the employee can buy the company’s stock at a set price. This is different from RSUs, where an employee would be given the stocks, which are vested at a later time. Even if a stock price decreases, RSUs also have an underlying value. 

There may also be some taxes that apply once the RSUs vest. 

What conditions may apply?

Common conditions for the vesting of RSUs include working for the company for a set period (typically a long-term commitment) or if a particular goal is reached, such as completing a specific project, or if the company goes public. 

For time-based vesting conditions, there may be a schedule that vests a portion of the RSUs after a set period. Then the remaining portions will be vested in later years. 

Why offer restricted stock units?

Employers may use RSUs to incentivize employees to stay with the company and retain talent. RSUs also incentivize employees to build up the company’s value through their work, as their stocks would be more valuable. 

Court finds tech employee entitled to RSUs as forfeiture terms not provided by employer

In the Maynard case, the employee began working for the employer in 2004. He was terminated without cause in 2018. 

The employee’s compensation package was changed in 2014 to include a base salary, benefits, and a bonus and incentive plan through RSUs. 

The employer had a “Share and Incentive Plan” policy, which dictated how the RSUs would be regulated. The Plan included a forfeiture provision that specified that if the employee were terminated without cause, the unvested RSUs would be forfeited and returned to the company automatically at the termination date. The employer also had the discretion to waive this automatic forfeiture of the RSUs if they chose to do so. However, there was evidence that the employee never received a copy of the Plan, which was never brought to his attention. He only learned of the Plan during litigation. 

At termination, the employee received compensation for pay in lieu of notice for 8 weeks, as set out in the Ontario Employment Standards Act. Also, the employer provided that his health benefits would continue for 8 weeks. In addition, he received $225,135.12 for 56 weeks of pay, plus an extension to his health benefits for 56 weeks. To receive this, the employee was asked to sign a release. 

In 2016 and 2017, the employee received RSUs valued at $118,335.95. These were not yet vested. According to the termination letter, the employer advised the employee that he would not receive the value of the RSUs, and his termination package was only based on his base salary, even though the RSUs made up approximately 37% of his total compensation. The release stipulated that the employee would waive rights to compensation for any bonuses, profit-sharing, or other entitlements, which included the RSUs. 

The employee did not sign the release. 

The court found that the facts differed from the case, Battiston v. Microsoft Canada Inc., 2021 ONCA 727, in which the Court of Appeal reversed the lower court finding that the employee was entitled to stock awards in his contract after termination. The Court of Appeal in Battiston ruled that the employee did receive notice of the terms, as each year for 16 years, when he accepted his stock award, he was provided with a drop-down window with the terms of the plan, and he was required to certify that he had read the terms. Even though the employee claimed he did not read the terms, the Court of Appeal found that he deliberately made the decision not to read the terms, and he was making a misrepresentation when he checked off the box that confirmed he had read the terms. 

In the Maynard case, there was evidence that the employee never even received a copy of the Plan that regulated the RSUs. Therefore, the court did not follow the Battiston case and decided that the employee was to receive the value of the RSUs even though he was terminated. 

The employer appealed the decision in Maynard, which was upheld in the Court of Appeal. 

Key Takeaways 

As the case law shows, any terms concerning the RSUs must be brought to the employee’s attention. If the terms are set out in a plan outside the main employment contract, the employer must provide a copy to the employee. If the terms are provided to the employee, more is needed for them to say that they did not read the terms if they affirmed that they had read them. 

Contact Haynes Law Firm in Toronto for Advice on RSUs in Employment Contracts

As RSUs become more popular in employment contracts, especially for tech workers, it is important to understand how they work. There may be terms in the employment contracts or related policies that set out the terms for RSUs. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from employment contracts or termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation upon termination. Haynes Law Firm also assists employers in avoiding liabilities that may arise from termination packages that are not in line with legislation or case law. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

An employment contract, unsurprisingly, is a type of contract. As a result, many of the regular principles of contract law apply in the employment law context too.

We regularly write about the implications of terminating an employee, which normally involves giving reasonable notice or making a payment in lieu of such notice. But can an employer terminate an employee without providing certain termination entitlements if the employment contract has become frustrated? 

This article looks at this question with reference to the recent decision of the Ontario Superior Court of Justice in Croke v VuPoint Systems Ltd. In this case, the employer terminated the plaintiff’s employment with two weeks’ notice after he refused to comply with its mandatory COVID-19 vaccination policy. 

What is frustration of contract?

Frustration of a contract may occur when a situation arises in which the parties made no provision for in the contract, which renders the performance of the contract a thing which is radically different from that which was previously undertaken under the contract. Performance of the contract, as originally agreed, needs to be more or less impossible due to the event that has happened.

When such an event occurs without the fault of either party, a court may be called upon to relieve them of the bargain they previously reached in the contract. 

What are the implications of a frustrated contract?

The legal effect of a frustrated contract is that the parties can treat the contract as being at an end, with no obligation to continue the contract and no entitlement to either party as a result of the end of the contract. 

In an employment law context, an employer may be entitled to end the contract without providing the employee with common law notice.

Defendant employer was required to institute a mandatory vaccination policy

Turning to the recent decision, the defendant employed the plaintiff as a systems technician starting in 2014. The defendant is a federally regulated employer, subject to the provisions of the Canada Labour Code, that provides services predominately to Bell Canada. The latter provided the defendant with more than 99% of their income.

In September 2021, Bell told the defendant that all installers would need two doses of a COVID-19 vaccine. This caused the defendant to institute a mandatory vaccine policy, which said that unvaccinated installers would be prohibited from performing work for certain customers and may not receive assignments.

Plaintiff refused to become vaccinated and was terminated

The defendant terminated the plaintiff in late September, effective October 12. He was given two weeks’ notice and severance pay of about $2,400. The plaintiff told his supervisor he was unprepared to disclose his vaccination status. He also said that he would never be vaccinated.

The plaintiff brought proceedings for wrongful dismissal. He argued that his employer failed to warn him of the consequences of not complying with the mandatory vaccination policy. He also contended that the employer could not establish that the employment contract was impossible to perform. 

The defendant responded that it was no one’s fault that the policy had come into effect, which required people entering the homes of Bell’s customers to be vaccinated, meaning the plaintiff was unable to continue to perform his duties. They had no other work for the plaintiff to do, so argued that his employment ended because the contract had been frustrated.

Plaintiff was warned that his employment would be terminated

Justice Pollak disagreed with the plaintiff’s claim that he was not told that he would be terminated if he did not comply with the mandatory vaccination policy. While the policy did not specifically mention termination, the evidence showed that he knew of the policy, only provided services to Bell and had told his employer that he would never become vaccinated. He was also told that his employment would be terminated in late September.

Court likened the case to a recent labour arbitration decision

Her Honour cited the 2022 labour arbitration decision of Fraser Health Authority v Hospital Employees’ Union, which she found was analogous to the plaintiff’s claim. In that case, the arbitrator decided that the employment contract of a unionized hospital healthcare assistant had been frustrated when she refused to comply with a mandatory COVID-19 vaccination policy. The employer was required to institute the policy under a provincial mandate.

Justice Pollak summarized the defendant’s position:

“The supervening event is Bell’s implementation of a mandatory vaccination condition on all subcontractors in order for those subcontractors to be eligible to perform installation services for Bell. [The defendant] submits that neither party could have possibly foreseen in 2014, when the parties entered into the employment contract, that an unprecedented global pandemic would occur that would cause Bell, to implement a policy requiring all [the defendant’s] installers to become vaccinated against said disease, failing which they would not be able to work for Bell.”

Radical change resulted in the frustration of the employment contract

Her Honour agreed that the vaccination policy was an unforeseen event not contemplated when the parties entered the contract. Neither party had a default, with the defendant contractually required to comply with Bell’s policies. The plaintiff’s inability to perform his duties constituted a radical change that frustrated the employment contract. Justice Pollak found that the defendant did not need to modify the contract to ensure he could continue to work and that the current situation was radically different from what the parties had intended in 2014.

The court dismissed the plaintiff’s wrongful dismissal claim.

Contact Haynes Law Firm in Toronto for Guidance on Employee Termination

The Haynes Law Firm helps both employers and employees deal with the termination process, reducing the chances of litigation and advocating for your rights. We also draft employment contracts, which are crucial documents, especially in the later event of a dispute. For all your employment law needs, contact us online or call us at 416.593.2731.