Change to Employment Agreement Extends Limitation Period

The standard limitation period for claims in Ontario is two years. If an individual or business is considering a lawsuit they are always well advised to consult a Lawyer as early as possible to determine when the two year limitation period begins and when it ends.

The recent Ontario Court of Appeal case, Ali v. O-Two Medical Technologies Inc. 2013 ONCA 733, shows the difficulty of determining a limitation period in certain employment disputes. In this case the Plaintiff worked on commission to sell medical devices in Iraq for his employer. Shortly after one such significant sale in December 2006 the employer notified the Plaintiff that it was unilaterally changing his commission structure. The Plaintiff continued working for his employer but informed it that he expected the original and higher commission to be paid. After the sale was completed the employer paid the Plaintiff the reduced commission in November 2007. Unhappy with the lower commission, the Plaintiff eventually started a court action in September 2009, well over two years from the date that he was first informed of the new commission structure.

The employer argued that by the time the Plaintiff commenced his court action over two years had passed since he was informed of the changes to his contract and it was too late to bring the dispute to court. However, in December 2013 the Ontario Court of Appeal ruled that this was not the case and decided that the two year limitation period did not start until the Plaintiff actually received the reduced commission in November 2007. The Plaintiff's court action was allowed to proceed.

Whenever an employer tries to modify an existing contract by reducing an employee’s compensation it creates the possibility of a legal action. The case of Ali v. O-Two Medical Technologies Inc. is an interesting example of when these contractual changes also increase the limitation period in which an employee can commence a claim in court.

‍Based in Kanata, the law firm of Allan Snelling LLP provides employment law advice to both employees and employers throughout Ottawa and the surrounding area.

Frequently Asked Questions

Are managers and supervisors ineligible for overtime pay?

I recently changed roles at work. My new title is “Accounts Manager” and I am responsible for all the company’s accounts payable and receivable. I also help other staff price our products and develop new accounts. I am very happy about my new role but my job used to be “9 to 5” and now I have to work late and on weekends. I asked my boss about overtime but was informed that managers and supervisors do not receive overtime pay. Is this true?

For most employees in Ontario overtime hours start after 44 hours of work in a week. For every hour worked in excess of 44 hours an employee is supposed to receive time and a half.

Under the Employment Standards Act there are exceptions to the general rule including that managers and supervisors do not receive any overtime compensation. For this “manager exception” to apply, an employee generally needs to be performing work that involves the supervision of other employees in a leadership role as opposed working in general administrative duties. Also, the exempt employee must be working in the manager role the majority of the time while at work - not just every now and then. The fact that someone’s job title includes the word “manager” or “supervisor” does not determine their entitlement to overtime pay. Rather, it depends on what the actual duties of the employee are.

Although many job titles, such Accounts Manager, include the word “manager” this does not necessarily mean you don’t get overtime pay. If your job does not involve supervising other employees this is a good indication that you may be entitled to overtime compensation. For more information you can seek legal counsel or examine the Ministry of Labour’s website at http://www.labour.gov.on.ca/.

What is "just cause" in employment law?

Last month local newspapers reported the case of a McDonald’s employee in Kanata who was dismissed after receiving poor performance reviews. The employee received more than $100,000.00 in court. Why?

‍The short answer is that the judge in this case found that although the employee’s performance was not perfect the employer did not have “just cause” to terminate her employment contract. If a business chooses to dismiss an employee the employer has to first decide if they have just cause to end the contract or not. Just cause exists when an employee has committed a serious breach of contract such as theft or continually missing work without reason. If the employer does not have just cause then in most cases they have to provide compensation which can equal up to a month of salary for every year of the employee’s service.

Many employers have staff who they believe are poor performers. Performance reviews are often done to encourage better performance but may also be an attempt to build a case for a just cause dismissal. After several poor performance reviews an employer may choose to dismiss an employee for just cause. However, a decision to terminate an employee for just cause can be challenged in court where employers often find it difficult to prove that the alleged breach of contract was serious enough to warrant a just cause dismissal. Poor performance reviews may show that an employee was less than perfect but this alone is usually not enough to disentitle them to some compensation when they are dismissed. Because compensation is typically based on the number of years the employee has worked, the amount owing to dismissed employee can be significant which is what occurred in the case of the former McDonald’s employee.

Fired without Cause - Should you take the offer?

I was fired without cause. My employer has given me an offer. Should I take it?

Answer: Employers aren’t handcuffed to their employees. If they act in accordance with their statutory and common law obligations, employers are free to part ways with employees without cause. Typically, the employer is obliged to provide statutory or common law reasonable notice or payment in lieu of notice. Costs, benefits, risks and reward of bringing legal action, should all be considered, prior to starting a claim.

Needlessly pursuing litigation could potentially prejudice the employee. You could delay the settlement and run the risk of losing a fair offer. You may find another job in the weeks following termination. If this happens, then the employer’s settlement may be subject to mitigation which means that they are credited the wages you obtain from that new job. You may also pay more in legal fees then the additional notice you should have received.

There are cases where employees are grossly underpaid when it comes to severance, so I do advocate that everyone who faces termination seek counsel to go over any severance offer. Do not sign it blindly. Speak to a Lawyer and make sure the offer is fair. Employers will often expect and, if prudent, will insist that their past employees reach out to counsel when deciding to sign a severance offer. You should do so as soon as possible after receiving the offer.

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