Employee Entitlements on Dismissal Under Common Law

When an employer chooses to terminate a worker's employment, one the most important considerations is whether the termination is a wrongful dismissal or for just cause. Most terminations are wrongful dismissals, typically entitling the dismissed employee to both reasonable notice damages at common law and damages under the Ontario Employment Standards Act.

A dismissal for just cause occurs when an employee has fundamentally breached their employment contract. This is often established by demonstrating acts of dishonesty, gross insubordination, or a persistent neglect of their duty. When an employer can demonstrate that they have just cause for terminating an employee they are typically relieved from paying any reasonable notice or Employment Standards Act damages. Many employment cases before the courts turn on whether an employee was dismissed for just cause.

However, a recent case demonstrates that even when an employee is found to have been dismissed for cause at common law, they may still be entitled to damages. The case of Oosterbosch v. FAG Aerospace Inc. 2011 ONSC 1538 (Can LII) is interesting because the trial judge found that the employee's conduct allowed a dismissal for just cause but still awarded damages under the Employment Standards Act. The court examined the difference in definition between just cause for termination at common law, and "wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer", being the conduct that disentitles a dismissed employee to damages under the Employment Standards Act.

The trial judge in FAG Aerospace found that while the employer did have just cause to terminate employment, there was not sufficient evidence to conclude that the employee's behaviour was “wilful misconduct, disobedience or wilful neglect of duty” to disentitle him to damages under the Employment Standards Act. It was accepted at trial that the employee was often late and was a poor performer at work despite numerous coaching sessions, but the judge concluded that this behaviour was not wilful on the part of the employee, but occurred simply through carelessness.

There are few employment cases that draw such a fine distinction between the common law and Employment Standards Act but FAG Aerospace demonstrates that proving just cause for termination is not the only consideration an employer should have when letting an employee go without offering severance.

Frequently Asked Questions

I was injured on the job. Should I claim workplace insurance vs. my right to sue?

I was injured in a car accident while driving to drop off a package for my employer—I almost never drive as part of my job. I work in an office as a clerk. The other driver was charged. Now I am off work and need physiotherapy. My doctor says I may have a permanent injury to my back. I have received a Notice from the Workplace Safety Insurance Board (WSIB) requesting that I elect whether or not I want to receive benefits.

‍Can I sue the other driver and receive benefits?

‍No. In Ontario injured workers who receive WSIB benefits forego their right to sue on their own behalf. You may choose to elect not to receive benefits and preserve your right to sue a third party in some limited circumstances. In Ontario, employees who are insured under the Workplace Safety Insurance Act scheme are not permitted to sue their own employer for injuries sustained while working. Depending on the nature of your job, you may not be able to sue another worker or employer either.

However, if you are injured in a vehicle collision and the responsible driver is not a worker as defined in the Act then you may elect whether or not you wish to receive WSIB benefits or pursue the at fault driver. That is a complicated decision.

Generally speaking, the more serious the injuries you have sustained the more likely you will be better off foregoing WSIB benefits and pursuing the at fault driver. However, if there are questions about liability (if you are wholly or partially at fault), or if there is a question about your ability to successfully recover damages in a tort action the WSIB scheme may be the best option for you.

Deciding whether or not to elect to receive WSIB benefits is complicated, and best made with the assistance of a Lawyer with experience in such matters. Experienced Lawyers are available to consult with you, often without obligation to you.

Are paid and unpaid internships illegal in Ontario?

I own a small events and promotions business. Every so often I get emails from students asking if they could volunteer to learn about the business. I’ve never hired a student because they’re inexperienced but I’m considering hiring one as an intern this summer. I don’t have the budget for a full time employee but I would be willing to pay them a modest stipend. I’ve heard both paid and unpaid internships are illegal in Ontario. Is this true?

In Ontario, the rules around internships are strict and in recent years some employers have been required to change their internship programs as a result. If someone is receiving on the job training from a business they are considered to be an employee of the business under Ontario law. As an employee they are entitled to a minimum wage under the Employment Standards Act so paying them a stipend that does not meet the minimum wage is against the law.

There are two exceptions to this general rule which recognize the educational value of internships. The first is internship programs approved by a college or university which are permitted.

The second exception is internships that meet criteria set by the Ministry of Labour. These requirements include that the intern is receiving valuable training, is not taking someone else’s job, and has not been promised a job after their training. The most important feature is the educational component: the primary purpose of internships is to teach valuable skills, not to provide cheap labour to businesses.

The safest way to ensure compliance with the law is to have an internship approved as part of a college or university program. Alternatively, you should design the internship ahead of time to focus it around training and skills development.

Are temporary layoffs permitted?

Work at my business has slowed down quite a bit this year. I currently have 11 employees but there is not enough work to go around. I should be getting a set of new contracts that will keep everyone busy this spring, but I’d like to make some temporary layoffs in the meantime to avoid having to let anyone go for good. I’ve discussed this with business colleagues who told me that temporary layoffs are not permitted for non-unionized employees. What are my options?‍

The law applicable to temporary layoffs in Ontario can be confusing. The Employment Standards Act does allow temporary layoffs of up to 13 weeks in a 20 week period. In certain seasonal industries, such as construction, temporary layoffs over the winter months are fairly common. However, in other workplaces courts in Ontario have treated temporary layoffs as constructive dismissals and have ordered employers to provide termination and severance pay.

In recent years, some Ontario court decisions have allowed temporary layoffs provided employers comply with both the Employment Standards Act and the terms of the employee’s contract. Depending on the nature of the work, such layoffs may even be permitted when an employee is working with an unwritten contract. A temporary layoff is also more likely to be permitted if an employee remains entitled to benefits and can access Employment Insurance during their time off. During any such layoff it is important to inform the employee that the layoff is temporary and to provide them with a return to work date. Finally, a temporary layoff should not be used as a form of discipline to punish an employee for misconduct – that will most certainly result in a claim for constructive dismissal.