(The abbreviated version of this article by Michael Stitz appeared in Canadian Lawyer Magazine Online, August 2019)

A recent Ontario Court of Appeal case highlights the costly and unpredictable nature of wrongful dismissal litigation and wisdom of employers instituting contracts that limit liability at the point of hire or when a significant change to an employee’s status occurs.

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Whether it is in social circles, boardrooms or negotiations between legal counsel, 24 months is generally regarded as the high water-mark when it comes to severance packages and determining common-law reasonable-notice awards for departing employees when they litigate

over a wrongful dismissal.

Stitz Litigation and Michael Stitz were successful in responding to a motion to strike their client's claim.  Clayton v. SPS Commerce Canada Ltd., 2018 ONSC 5017 (CanLII)

As a result of the decision, the Ontario Superior Court of Justice  permitted an employee to refer, in her Statement of Claim for inter alia, constructive dismissal and bad faith, to the "communications and conduct" of the company's lawyer in respect of a sexual harassment investigation.

(The abbreviated version of this article by Michael Stitz appeared in Canadian Lawyer Magazine InHouse Online, April 2018)

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Whether it comes to negotiating a severance package or determining the period over which damages are calculated in a wrongful dismissal lawsuit, 24 months has generally been regarded, save in the most exceptional circumstances, as the unofficial cap on reasonable notice.

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However, Ontario courts have been sending a message over the past several years that there is no such cap, particularly as it concerns employees that have been employed by a single employer for their entire adult working lives and that are of a senior age.

Employers will need to revisit their termination clauses as well as stock option and bonus plan documentation given the Ontario Court of Appeal has clarified the circumstances under which an active employment clause can effectively be used to limit liability at the point of termination.

In Canada, employment law matters often boil down to established first principles that employers should be cognizant of, particularly those from foreign jurisdictions.

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First principles include, not contracting out of statutorily mandated employment standards, the provision of reasonable notice or pay in lieu thereof when dismissing an employee on a without cause basis and, the notion that an employee can have multiple employers despite a contract indicating they are an employee of a single corporation.

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The British Columbia Court of Appeal recently discussed these principles in the context of multinational subsidiaries operating within Canada in its decision in Stanley v. Advertising Directory Solutions Inc., 2012 BCCA 350, 2012 CarswellBC 2491 (B.C.C.A.).

Michael Stitz Was Quoted by HRM Online on November 14, 2014.

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Employers in Ontario are being urged to reconsider their tactics when managing disability discrimination and human rights litigation after the Ontario Divisional Court recently upheld the decision that one worker should be compensated despite a decade passing since her dismissal.

Courts supported the ruling of the Ontario Human Rights Tribunal in the case of Hamilton-Wentworth District School Board v. Fair, wherein the committee ordered Sharon Fair be reinstated into suitable alternative employment with her previous employer and awarded backdated wages from June 26, 2003 until the date she is reinstated in an accommodated or alternative position.

According to Ontario based employment lawyer Michael Stitz, “The case sends a strong message that situations involving discriminatory conduct combined with a wrongful dismissal action may not be analyzed using the typical wrongful dismissal reasonable notice framework given the broad and creative remedial powers the tribunal possesses.”

Employers in Ontario will need to reconsider the manner in which they handle workplace issues involving disability management and human rights litigation after the Ontario Divisional Court recently upheld the 2012/2013 decision of the Ontario Human Rights Tribunal in Hamilton-Wentworth District School Board v. Fair, wherein the tribunal ordered Sharon Fair be reinstated into suitable alternative employment with her previous employer after approximately a decade had passed since her dismissal. This was in addition to the tribunal employing its power to order approximately a decade of back wages from June 26, 2003 (the date an accommodated/alternative position was available for the applicant to return to), to the date of reinstatement.

A thorough and impartial response to allegations of harassment can often pay dividends when an employer is required to address the legitimacy of its decision to terminate or preserve an employment relationship. However, when an employer approaches issues of harassment in a haphazard manner, without the machinery of an adequate investigation, liability for damages can arise. With recent amendments to occupational health and safety legislation requiring mandatory workplace anti-harassment policies and extraordinary remedies under the common law on the rise, employers have begun to reconsider the manner in which they address allegations of harassment, and conduct investigations...

On December 16, 2013 an Alberta arbitration panel awarded an employee over $800,000 for lost future income, loss of past income, and general damages, all as a result of a mishandled response to a workplace sexual assault...

In Chalifour v. IBM Canada ltée, 2011 QCCS 5777, 213 A.C.W.S. (3d) 113, the Superior Court of Quebec recently ordered IBM to pay one of the highest extraordinary damage awards since the 2008 decision in Keays v. Honda Canada Inc. (2008), 294 D.L.R. (4th) 577, [2008] 2 S.C.R. 362. Former IBM executive, Dennis Chalifour, was awarded $300,000 in punitive damages and $35,000 in moral damages as a result of the constructive dismissal he suffered amidst his battle with bladder cancer. This case serves as a stark reminder that when bad faith rears its head in the manner of dismissal or an employer acts in a callous and high-handed manner towards an employee, especially an executive, it will be made to pay more than simply compensation in lieu of notice...

In the recent decision rendered in Paquette c. Quadraspec Inc., 2014 ONCS 2431, 2014 CarswellOnt 5338 (Ont. S.C.J.), the Ontario Superior Court of Justice disregarded previous wisdom, concluding that an Ontario employer’s payroll outside the province should also be accounted for when determining whether it is obligated to pay statutory severance pursuant to s. 64 of Ontario’s Employment Standards Act, 2000, S.O. 2000, c. 41 (”ESA”). The decision is significant in that the Ontario court has traditionally viewed a company’s Ontario payroll as the only applicable payroll to account for when determining if the statutory payroll threshold for severance obligations has been met.

The Ontario Court of Appeal’s recent decision in Doyle v. Zochem Inc., 2017 ONCA 130, 2017 CarswellOnt 1733 (Ont. C.A.), has confirmed that an award of both moral and human rights based damages may be the consequence when sexual harassment and bad faith intersect at the time of dismissal. This is despite the conduct underpinning both extraordinary damage awards overlapping...

Typically, restrictive covenants (non-competition or non-solicitation clauses) are utilized in contracts of employment or contracts involving the sale of a business in order to protect its goodwill and limit a former employee’s ability to compete with his or her former employer or business...

The Ontario Divisional Court in Fair v. Hamilton-Wentworth District School Board, 2014 ONSC 2411, 2014 CarswellOnt 13509 (Ont. Div. Ct.), recently upheld the Ontario Human Rights Tribunal’s decision in 2013 C.L.L.C. 230-020, 2013 CarswellOnt 9218 (Ont. Human Rights Trib.), in which the tribunal made use of one of its most significant remedial powers, reinstatement, ordering Sharon Fair be returned to her position with the school board after approximately a decade had passed since her dismissal.

On January 2, 2014, the Ontario Superior Court of Justice certified a class proceeding, Brigaitis v. IQT Ltd., 2014 CarswellOnt 504, 2014 ONSC 7 (Ont. S.C.J.), commenced on behalf of 521 wrongfully dismissed employees against their former employer, IQT, Ltd. (”IQT”), among others...

In SMS Equipment Inc. v. CEP, Local 707, 2015 CarswellAlta 385, 2015 ABQB 162 (Alta. Q.B.) (”SMS”), the Alberta Court of Queen’s Bench upheld an arbitrator’s determination that SMS Equipment Inc. was obligated to accommodate Ms. Renee Cahill-Saunders (the “grievor”) because the requirement for her to work rotating night and day shifts discriminated against her on the basis of family status, given that she was a single mother of two young children who encountered child care difficulties during night shifts...

An individual’s employment often comprises a large part of their identity. To this end Canadian employment law has long recognized that the employment relationship is different from a commercial relationship and that employees are vulnerable to the power imbalance that typically favours employers. Therefore, when employers dismiss employees and level unfounded allegations of just cause against them in an attempt to avoid legal and financial obligations, courts take exception.

The consequences that flow from an independent contractor being deemed an employee can be monumental for companies operating in Canada, both from a legal and financial standpoint.

In the last half of 2012, two Canadian juries (in Higginson v. Babine Forest Products Ltd. and Boucher v. Walmart) have awarded over $500,000 each in punitive damages, the largest such awards arising from wrongful dismissal litigation in Canadian history.

On September 12, 2013, the Ontario Superior Court of Justice released what appears to be the first decision in which a court in Ontario has awarded damages for a Human Rights Code, R.S.O. 1990, c. H.19 (”the Code”), violation in a wrongful dismissal action.