Employers, Be An Alert; Employees, Know Your Rights! Precarious Employment Is Ushering In Employee-Protective Decisions

McDonald’s has been getting some bad press lately. Protesters in Chicago expressed their displeasure with the company’s wages and working conditions on Tuesday May 23, 2017. On the same day here in Ottawa, a woman was awarded $100,000.00 in damages by the Ontario Court of Appeal for wrongful dismissal after working for McDonald’s for twenty-five years. The court held she had been constructively dismissed, meaning the employer unilaterally changed the terms of employment in a way that effectively ended the employment relationship. The court also forced the company to pay her $120,000.00 legal costs.

But employers in Ontario should not only take note of the recent Ontario Court of Appeal decision against Mickey D’s. The Ontario Court of Appeal released a case on Wednesday May 24, 2017 which follows a growing trend in Ontario employment case law.

Precarious employment is on the rise, with temporary employment contracts characterizing many people’s employment situation. The Canadian economy’s sluggishness is arguably one casualty of this reality, which arguably reinforces the trend towards short-term contracts. But the economy is not the only casualty. Another is investors, as interest rates are suppressed arguably in order to permit many Canadians to satisfy their expenses while working in low wage, short-term contract jobs.

A number of recent Ontario court cases suggest that the courts recognize another casualty of precarious employment: uncertainty for employees and termination without cause.

The single largest asset the middle class has is their jobs, and these hinge precariously on short term contracts that offer little certainty for employees. While this is arguably a reflection of the lack of certainty that companies themselves suffer, the public policy challenge the courts are grappling with is the effort to prevent employees from suffering the hardest brunt of economic uncertainty through short-term employment contracts, which make it easier for companies to satisfy investors by quickly removing employees from their expense ledgers.

There is a strong arguable case that, as a result, Ontario courts have come down hard on clauses that are contained in short term employment contracts, which permit an employee to be fired on the drop of a hat without cause as business needs arise. The most recent of these is the case of Wood v Fred Deeley Imports Ltd.

The plaintiff’s employment contract contained a termination clause which provided that the defendant was entitled to terminate her employment at any time without cause by providing her with two weeks’ notice of termination or pay in lieu of notice for each completed or partial year of employment.

But the court determined that the termination clause contravened the Employment Standards Act, 2000 and was therefore unenforceable because it did not mention the defendant’s statutory obligation to make benefits contributions during the notice period. The fact that the defendant actually made contributions to the plaintiff’s benefits plans during the notice period could not remedy an unenforceable and illegal termination clause. The termination clause was also unenforceable because it did not clearly satisfy the defendant’s statutory obligation to pay severance pay.

The plaintiff was entitled to reasonable notice of termination or the equivalent in damages.