How can I exploit missing Record of Employment for higher severance?

Fair termination pay increase for no Record of Employment and corresponding EI benefit interference.

According to Antidormi v. Blue Pumpkin Software Inc., [2004] O.J. No. 3888::

The company failed to comply with the provision in the Ontario Employment Standards Act stipulating that a Record of Employment must be provided seven days after the date of termination. Far from providing the Record of Employment in a timely way to facilitate her application for Canadian Unemployment Insurance, her Record of Employment was provided five months after the date on which it was due. Blue Pumpkin also delayed in providing her T-4 slip, in turn delaying the filing of her tax return and delaying the processing of her request for a tax refund as a result of her unemployment.

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In my view, Blue Pumpkin's conduct at the time of termination, the mandatory mediation and indeed at the trial, did reflect a blatant disregard, callous and insensitive treatment of Antidormi. Its failure or refusal to address Antidormi's concerns, to treat her fairly, reasonably and decently, taken together, amount to unduly insensitive conduct that has affected her emotionally and professionally and that ought to merit compensation.

Given Blue Pumpkin's bad faith conduct, I would extend the notice period on account of this factor by a further two months.

When can employer terminate for absenteeism?

High standard to dismiss for gross absenteeism.

According to Fleming v. J.F. Goode & Sons Stationers & Office Supplies Ltd., [1994] N.S.J. No. 249 (N.S.S.C.):

Absenteeism as a justification for dismissal, without notice ... [faces] ... twelve factors considered by the Courts in assessing whether the absenteeism, in the particular circumstances, is sufficient cause for summary termination:

"(1) It must be misconduct of significance"

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"(2) Failing to return promptly after a leave of absence, without advising one's employer, or taking time off despite a direct order not to do so."

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"(3) The employee took time off under false pretences."

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"(4) Prejudice to the employer's interest."

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"(5) Generally, two instances of absenteeism are required, particularly where the employee is of long service and has acted faithfully in all other respects."

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"(6) It must result from intentional misconduct, rather than just from a misunderstanding."

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"(7) It must be the fault of the employee."

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"(8) Where warnings are provided, they should specify that the employee will be terminated if his absences continue."

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"(9) Whether there is a reasonable defence, such as illness."

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"(10) The type of employment."

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"(11) An employee's history of long service without a record of significant absenteeism can be used as a mitigating factor."

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"(12) The onus of proof is on the employee to establish that he has received permission to take a leave of absence."

What is employee's duty to mitigate their wrongful dismissal damages?

Employer bears heavy onus to prove failure to mitigate.

According to the Supreme Court of Canada, if the defendant argues that the employee could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue. In Michaels v. Red Deer College, [1976] 2 S.C.R. 324 at 4 (S.C.C.).

Laskin C.J. stated:

[i]f it is the defendant’s position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue…The employee should be allowed an appropriate amount of time to adjust to his or her situation and plan for the future before strictly imposing the obligation of mitigation and … [a]n employee’s failure to attempt to mitigate for the first few months after termination may be excusable where it is due to distress caused by the termination…[t]he bottom line is that courts will stop short of imposing an undue hardship on the employee. In that regard, it is noteworthy that the courts will afford the employee a brief “breathing space” of one or two months following the date of dismissal before requiring him or her to fulfil the duty to mitigate. The purpose is to allow the employee to recover from the shock of the dismissal.

In order to prove failure to mitigate damages, an employer is required to prove no less than the employee rejected a suitable position or made no effort whatsoever to find other employment. In his Wrongful Dismissal Handbook, at 6-40.9. Mr. Justice John R. Sproat writes:

[i]t is virtually impossible for an employer to prove a failure to mitigate damages in the absence of evidence that the employee rejected a suitable position or made no efforts whatsoever to find other employment.

According to Hadjis v. Morningstar Research Inc., [2006] O.J. No. 1417 (Ont. Div. Ct.):

The learned judge further held that though the respondent's mitigation efforts were "less than satisfactory", she was not prepared to conclude that the evidence justified a discounting of the plaintiffs entitlement on reasonable notice. At page 35 of her reasons, Horkins J. concluded:

"In this case there is no question that the plaintiffs mitigation efforts and documentary proof of such efforts are less than satisfactory. However, I cannot conclude that no efforts were made to find other employment and for this reason I reject the defendant's argument that a failure to mitigate exists that merits a reduction in the notice to which the plaintiff is entitled."

Meanwhile, no plaintiff is required to conduct a fruitless job search as a condition of being awarded damages in an action for wrongful dismissal. According to Laskin C.J. in Veer v. Dover Corp. (Canada) Ltd. [1997] O.J. No. 3821at ¶ 55 (Ont. Gen. Div.):

A plaintiff is not required to conduct a fruitless job search as a condition of being awarded damages in an action for wrongful dismissal. After all, it is the defendant’s wrongful conduct which has put the plaintiff in the position of seeking employment. It seems to me, that following a dismissal in circumstances such as these, it would be unfair to require a plaintiff to subject himself to the added humiliation of further rejection when it is evidence that mitigation is quite unrealistic. A plaintiff must only mitigate if he can.”

When are managers still entitled to overtime pay?

Employment Standards Act (“ESA”) managerial overtime exemption applies only to those employees "whose only work is supervisory or managerial in character".

Especially where no direct reports - let alone any discretion nor independent judgment in management affairs at all - too many employees are manager in name only, and therefore entitled to significant overtime monies claimed.

According to 595749 Ontario Ltd. v. Ilowski, [2001] Canlii 14888 (O.L.R.B.):

"At the same time, one cannot impute managerial status to any employee whose job duties include some tasks which might be considered managerial in nature, or who has some involvement in the management team, as the term 'only', as is noted by the Divisional Court, balances the notion of 'character'. The term 'only' has to be given some meaning, and while it does not preclude the performance of some duties other than those which are supervisory or managerial in character, it does not permit the exclusion of an employee whose main job duties cannot be so characterized."

Wrongful dismissal advice in the age of social media.

1) Employers search social media when hiring, to learn more about prospective candidates than what typically comes across from a standard interview, resume, and cover letter. Therefore smart job-seekers will want to improve their linked-in and Facebook profiles to come across as more stable, social, and connected over all.

On the other hand, racy photos, inflammatory political comments, weird interests, too many typos, and bathroom humour may deprive you of the white-shoe accounting firm job you otherwise stood to land. So long as employer's not breaching human rights law, companies can and will lawfully discriminate against job candidates based on their social media profile and affiliations.

2) Employees get fired for social media comments where disparaging bosses, and/or threatening co-workers. Unfortunately, employees typically don't spend the kind of time/attention proofreading their Facebook status updates as they do their resumes and cover letters.

In our practice, we've seen a significant post-2010 increase in employees terminated because of social media complaints about their employers, co-workers, suppliers, customers, and other workplace contacts.

Too many employees believe these comments are just circulating among friends, however don't realize how often their work "friends" will turn these comments over to their employer for political gain. We've also seen an increasing number of cases where the employer intentionally planted co-workers to befriend these employees in the first place for specific purpose of digging up ammunition to then terminate these loose-lipped employees for just cause without severance.

3) On the other hand, employers are more vulnerable than ever to disgruntled employees looking to disparage their employers on-line. Whereas a terminated employee will have previously told a handful of acquaintances about their company's underhanded dealings, that same terminated employee will now magnify those disparaging allegations exponentially through Google review, Yelp, Facebook, and endless other social media websites appealing to these unemployed complainers with much free time on their hands. For this reason, employers are sometimes better paying off a terminated employee with a nuisance value severance package than investing hundreds of thousands in having to defend their former top-100 employer reputations on-line.

4) Social media can magnify the emotional/reputational effects of termination. Whereas a terminated employee would have previously had some time to transition to their next job before explaining to friends/family about their workplace change, it's now far more difficult to keep embarrassing terminations under wraps when their Facebook friends have grown accustomed to their daily status updates about day-to-day goings-on at work.

5) Finally, social media turns employment lawyers into on-line detectives. Employees are constantly coming across re-postings of their former positions as evidence that their jobs were not in fact getting outsourced as alleged by their boss. On the other side, employers are consistently searching employees' Linked-in and/or Facebook profiles to discover that mentally distressed employee has actually been partying in Vegas or landed an even higher-status/pay job within just a few weeks of termination.

Either way, social media has certainly made the employment law field more high-stakes, explosive, and fortunately/unfortunately lining the pockets of lawyers on both sides.

Q. How do employees argue around unfair employment contracts?

A. Employees have 5 main arguments around onerous employment terms.

Given Ontario courts’ default position against enforcement of these covenants in restraint of free/natural trade, employer bears onus of proving vulnerable/proprietary interest justifying exception enforcement of employee’s non-compete/non-solicitation terms.

Even then, employee can still argue these clauses (a) over-reaching/unreasonable, (b) vague/ambiguous, (c) not fully understood/appreciated upon signing, (d) signed under duress only after having already forfeited prior/competing employment opportunities at the time, and/or otherwise (e) outgrown/outdated given long time passage and employment changes since original signing.

While not without risks and potential employer application for court injunction and/or lawsuits against both employee and their new employer – employee nevertheless holds strong arguments against enforcement of anti-competitive restraints based on personal freedoms of association and free-market right to earn a living in their field.

Q. Are outdated employment terms enforceable in court?

A. Original contract provisions can be outgrown.

According to the Ontario Court of Appeal in Wallace v. Toronto-Dominion Bank, [1983] O.J. No. 2969 (Ont. C.A.):

Certainly, there are readily imaginable cases where an employee's level of responsibility and corresponding status has escalated so significantly during his period of employment that it can be concluded that the substratum of an employment contract entered into at the time of his original hiring has disappeared or it can be implied that that contract could not have been intended to apply to the position in the company ultimately occupied by him.

In many cases, arguable that employee outgrew original contract terms over past years of advancing employment, raises, promotions, responsibility, and changing circumstances overall.

Q. Do employment terms need to be fair?

A. Employment terms unenforceable without equal bargaining power of negotiation.

According to Sheridan’s Fraud in Equity (London, 1957), at p. 73:

The cases in which equity has relieved from a bargain where there is no misrepresentation, no fiduciary relation, no mistake or undue influence or duress, and no question of a party being an expectant heir or the like, are difficult to classify. Probably the only safe generalisation is that the court considers each case on its individual merits to see whether one party has taken advantage of the weakness or necessity of the other to an extent which strikes the judge as being a greater advantage than the current morality of the ordinary run of business men allows.

In many cases, arguable that employer exploited unequal bargaining power in forcing unconscionable restraint of trade provisions against employee’s free bargaining will.

Q. What level of understanding required for enforcement of onerous employment terms?

A. Enforceable contract provisions require fair understanding and appreciation at signing.

Did your employee really understand/appreciate contract provisions signed so many years ago?

In Cantol Ltd. v. Brodi Chemicals Ltd. et al. (1978), 23 O.R. (2d) 36, 94 D.L.R. (3d) 265, 42 C.P.R. (2d) 111, restraint of trade provisions were not enforced where the employee did not have much opportunity to not sign the contract, or if he did sign he did not read it or was not given the opportunity for independent legal advice.

In a similar case of Cradle Pictures Canada Ltd. v. Penner et al. (No. 2) (1977), 34 C.P.R. (2d) 34, restraint of trade provisions were not enforced where the defendant had not read over the employment contract, nor received reasonable opportunity for independent legal advice.

In many cases, employee may not have fully understood/appreciated legal impact of non-compete/non-solicit provisions, signed without prior/independent legal advice, signed under duress/only after having already forfeited competing employment opportunities, etc..

Q. When are employment terms too vague for enforcement?

A. Unrestricted employment covenants are often unenforceable at law.

In Drake International Inc. v. Tennenbaum (1986), 10 C.P.R. 119 (Ont. H.C.J.), Callaghan A.C.J.H.C. held a covenant to be unenforceable on the basis that it was vague as to time and silent as to geographical area.

Similarly, many non-compete provisions are too vague for enforcement by Ontario courts, unnecessarily broad/open-ended, unrestricted by geographic area and/or particular field, and therefore overreaching in so far as potentially including entire public at large.

Q. When are restraint of trade provisions too onerous for enforcement?

A. Overreaching employment terms will not stand in court.

In Mercury Marine Ltd. v. Dillon (1986), 56 O.R. (2d) 266, 30 D.L.R. (4th) 627, Henry J., on an application for an interlocutory injunction, considered the covenant given by a distributor of outboard motors that, for a period of 18 months, he would not be employed or render services to any third party who was a competitor of the plaintiff, or any third party where trade secret information might be useful. Henry J. concluded that the covenant was not reasonable because there was no territorial limit. On the issue of balance of convenience, he held against the plaintiff since the defendant's livelihood was at stake.

In Crain-Drummond Inc. v. Hamel, Charron J. considered a restrictive covenant given by a sales representative in which he agreed that for a period of one year after departure, he would not engage in any business carried on by the plaintiff in the territories in which he had been assigned as sales representative and would not solicit customers of the plaintiff in those territories. Charron J. concluded that, while the plaintiff arguably had a proprietary interest entitled to protection, she thought it unlikely that a court would enforce the covenants in the broad fashion in which they were drawn. She dismissed the application for an interlocutory injunction.

In Jet Print Inc., Nordheimer J. denied an interlocutory injunction against printing and sales employees who had covenanted, for a period of two years, to not solicit or perform services for any client for two years. "Client" was defined as those currently existing, those who existed for the year prior to termination and any prospective clients to whom a presentation had been made in the past two years. Nordheimer J. concluded that the covenant would likely be found to be unreasonable because of the length of time given the nature of employment of the defendants and the broad list of "clients".

Q. What legal interest does employer maintain in employee's personal skills?

A. No proprietary interest in employee’s personal skills.

According to Cheshire & Fifoot, Law of Contract (7th Ed.) Part IV. Ch.VI at p.347:

It has already been seen that a restraint imposed upon a servant is never reasonable, unless there is some proprietary interest owned by the master which requires protection. The only matters in respect to which he can be said to possess such an interest are his trade secrets, if any, and his business connection.

According to Ian Martin Associates Ltd. v. Reale, [1971] O.J. No. 308 (Ont. High Ct.):

In addition, the defendant was a young junior salesman among numerous salesmen employed by the plaintiff. His contacts were thus distinctly limited and there was no evidence that he had acquired any influence over the plaintiff's clients. Much stress was laid in this connection on the acquired knowledge of the precise individual to deal with among the executive personnel of any particular client. This argument seems naive to me since the factors which would bring about a business contract between a service company like the plaintiff's and a client are constantly changing. To be successful, the defendant must, in the end result, employ his own skill and personality to the fullest extent, and the plaintiff has no proprietary interest in these characteristics.There are numerous cases where business connection with customers and clients has been protected but when one examines them, one finds that in virtually every case the employee has been the sole representative of the employer in an area distant from the employer's principal place of business and, hence, to all intents and purposes in the eyes of the public and the employer's customers, is the person providing the service or goods.

In Drake International Ltd. v. Miller et al., 9 O.R. (3d) 652, the plaintiff company carried on an employment agency business and sought to restrain a former employee from competing with it and relied upon the non-competition covenant contained in its contract of employment with the defendant Miller. Mr. Justice Grange concluded that the restrictive covenant ought not to be enforced and that it was not necessary for the protection of a legitimate interest of Drake International. Page 660 states:

As I see the problem, we must examine carefully the facts of the business to determine whether the nature of the employment produces the conditions precedent in the validity of a covenant in restraint of competition by the employee and whether a Court would deem such a covenant therefore reasonable in the circumstances. This examination is very difficult upon an application in Weekly Court where normally only affidavit evidence is offered. After giving the matter the most careful consideration, and not without a great deal of doubt, I have reached the conclusion that the nature of the business with which we are here concerned is closer to the estate agent business depicted in Bowler v. Lovegrove, supra, than it is to the catering business in the Jiffy Foods case. I say that for the following reasons:

a) I can find no evidence of any real "trade secrets" in the operation of the business;

b) there is the widest latitude in the trade in the obtaining of custom. The agents canvass businesses regularly without restraint; they search out the advertisements placed by businesses for employees; they realize that they are in a competitive market where the only criterion for further employment is results;

c) there is no physical or geographic benefit to the solicitation of business. Any agency is restricted only by the cost of the long distance telephone or on rare occasions by the inconvenience of personal interviews at some distance from their own location;

d) every agency realizes and appreciates that the businesses with which they deal and the job applicants who seek the positions with those businesses are perfectly free to, and very often do, consult other agencies simultaneously.

It follows that I have concluded that the plaintiff, upon whom the burden lies, has not satisfied me that the covenant it exacted from the defendant was necessary for the protection of a legitimate interest.


In Gerrard v. Century 21 Armour Real Estate Inc., Feldman J. considered the application by the plaintiff for an interlocutory injunction to compel its former sales manager to comply with her covenant that, for one year following termination, she would not provide the same services for a competitor within a proscribed area, would not solicit or encourage other employees to leave, and would not agree to a business association with any individual who was employed by the plaintiff. Feldman J. held that the covenants were likely to be found to be unreasonable based on the broad definition of client and the apparent objective of prohibiting competition generally rather than as protection of the plaintiff's interest in its customers.

In Robbins & Myers Canada Ltd. v. Washington, [1993] O.J. No. 1264, Belleghem J. refused to grant an interlocutory injunction. The employed sales representative had covenanted that, for a period of two years after termination of employment, he would not engage in or represent, directly or indirectly anybody engaged in the sale or solicitation of products which were similar to or competitive with any of the products covered at the time the covenant was given. The court concluded that the covenant was unreasonable because the time frame would have eliminated the defendant as effective competition.

In many cases, employee’s personal, sales, and professional skills are their own and don’t stem from nor dependent on their employer. Therefore, employer has no vulnerable/proprietary interest in need of protection so as to justify restrictive non-compete/non-solicitation terms.

Q. What respect do Ontario courts have for restraint of trade contracts?

A. Public policy sides against non-compete/non-solicit enforcement.

As a starting point, public policy sides against enforcing restraint of trade provisions. According to Nordenfelt v. Maxim Nordenfelt Guns Ammunition Co., [1894] A.C. 535, [1891-4] All E.R. Rep. 1, at page 565:

The public have an interest in every person's carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable -- reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.

More recently, the Supreme Court of Canada addressed very limited conditions under which non-compete/non-solicit provisions are indeed enforced on a case-by-case/exceptional basis. According to Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916, at pp. 923-24:

A covenant in restraint of trade is enforceable only if it is reasonable between the parties and with reference to the public interest. As in many of the cases which come before the courts, competing demands must be weighed. There is an important public interest in discouraging restraints on trade, and maintaining free and open competition unencumbered by the fetters of restrictive covenants. On the other hand, the courts have been disinclined to restrict the right to contract, particularly when that right has been exercised by knowledgeable persons of equal bargaining power. In assessing the opposing interests the word one finds repeated throughout the cases is the word "reasonable". The test of reasonableness can be applied, however, only in the peculiar circumstances of the particular case. Circumstances are of infinite variety. Other cases may help in enunciating broad general principles but are otherwise of little assistance.

It is important, I think, to resist the inclination to lift a restrictive covenant out of an employment agreement and examine it in a disembodied manner, as if it were some strange scientific specimen under microscopic scrutiny. The validity, or otherwise, of a restrictive covenant can be determined only upon an overall assessment, of the clause, the agreement within which it is found and all of the surrounding circumstances.

Meanwhile, according to Computer Centre Personnel Ltd. (c.o.b. Computer Centre) v. Z [1976] O.J. No. 810 (Ont. High Ct.):

The covenant is in restraint of trade and therefore is prima facie unenforceable. However, if the plaintiff has interests that can or should receive protection by an injunction, then the covenant will be enforced if it is (a) reasonable and (b) consistent with the interests of the public.

Finally, Shaw Laboratories Ltd. v. Rilett, [1984] O.J. No. 1138 confirms employer’s onus in passing four-step test for enforcement of non-compete/non-solicit provisions in issue:

In deciding on the validity of a covenant in restraint of trade it is useful to follow the four stage inquiry referred to by Blair, J. in Tank Lining Corp. v. Dunlop Industrial Ltd., 40 O.R. (2d) 219 at 223. The first question is whether or not the covenant was in restraint of trade. There is no doubt here that the covenant not to compete within the City of London for two years was in restraint of trade. The second question is whether the restraining clause is against public policy and is therefore prima facie void. The third question is, can the restraint be justified as reasonable in the interests of the parties. The fourth question is, can the restraint also be justified as reasonable with reference to the interests of the public.…The burden of proof is on the plaintiff to show on a balance of probabilities that the restraint is justified as reasonable in the interest of the parties.