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| Inna Koldorf |
1. Consideration
In Giacomodonato v. PearTree Securities Inc., 2024 ONCA 437 the Ontario Court of Appeal confirmed that Ontario courts are concerned with the existence of fresh consideration when a contract is signed by an employee mid-employment, but not with the adequacy of the consideration.
The parties in this case entered into one employment contract, and three months later entered into a second employment contract after the employee began employment. The second employment contract contained terms which were more restrictive for the employee than the first employment contract. The employee’s employment was terminated without cause, and he alleged that he was wrongfully dismissed.
The lower court agreed with the employee that he had been wrongfully dismissed. In assessing damages, the employee argued that the terms of the first contract should apply because he was not provided with fresh consideration when he signed the second contract, rendering the second contract unenforceable. The employer maintained that the second employment contract was enforceable and that the termination clause in the second
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The Court of Appeal upheld the trial judge’s decision, confirming that the second contract was enforceable. The court noted that an employment contract can only be unilaterally altered by an employer when something “new and of benefit” is given to the employee beyond continued employment. Importantly, the court concluded that courts are concerned with existence of consideration, but not with its adequacy, confirming that consideration can be anything of value to the employee. The court further confirmed that there is no need to do a comparative analysis of the overall advantages and disadvantages of the first and second contract in assessing whether consideration was provided. Any benefit given to the employee may serve as consideration.
2. Vacation pay entitlement on a discretionary bonus
In Gazier v. Ciena Canada, ULC, 2024 ONSC 865, an employee with 22 years of service was terminated without cause. The employee filed a wrongful dismissal claim and raised a number of legal issues, including whether he was entitled to vacation pay calculated on his base salary and on the bonus he would have earned during the notice period.
The Superior Court of Justice noted that a bonus which does not depend on the discretion of the employer qualifies as wages under the Employment Standards Act, 2000 (the ESA), and therefore forms part of the earnings on which vacation pay would be calculated. However, in this case the employee’s bonus entitlement was discretionary and dependent on his performance and the company’s performance. It therefore did not form part of his wages. As a result, vacation pay should only be calculated on the basis of the employee’s base salary at the time of termination.
3. Reasonable notice period
In a decision which will no doubt act as a deterrent for employers, the Small Claims Court awarded a disproportionate reasonable notice period to a short-term employee. In Smith v. Lyndebrook Golf Inc. carrying on business as Lyndebrook Golf Course, 2024 the employee was hired by the company as a Golf Superintendent. The parties did not sign an employment contract. A month into his employment the company terminated the employee’s employment. Although the company later stated that there were issues with the employee’s performance, it did not provide reasons for the termination and further provided the employee with two weeks of pay when his employment was terminated.
The employee filed a wrongful dismissal claim. The company filed a counterclaim for alleged costs incurred to fix items which were allegedly damaged by the employee during his employment. The deputy judge considered the Bardal factors as a whole, but seemed to have given more emphasis to the length of service and the timing of the termination. The employee was a short-term employee whose employment was terminated mid-season, making it difficult to find alternate employment as the season was already in full swing. Further, the employee held a very skilled position, making reemployment in his field during the same season challenging. Although the deputy judge specifically stated that the contract between the parties was not a fixed-term contract, he awarded five months of notice to the employee, essentially ensuring that the reasonable notice period covered most if not all of the season for which the employee was hired. The deputy judge also awarded symbolic moral damages to the employee in the amount of $100 for the company’s “hardball” tactics of making unsubstantiated allegations of impropriety and commencing a counterclaim to dissuade the employee from continuing with his action. The deputy judge determined that these actions were in breach of the company’s duty of good faith dealings with the employee, and warranted the payment of moral damages. The deputy judge declined to award punitive damages, however.
4. Workplace investigations
In Metrolinx v. Amalgamated Transit Union, Local 1587, 2024 ONSC 1900, five employees of Metrolinx filed a grievance following the termination of their employment for cause as a result of an investigation which concluded that they had engaged in workplace harassment. The five employees sent messages on a WhatsApp group chat on their personal phones in which they stated that a number of female employees, who they identified by name, engaged in sexual acts, including for the purpose of career advancement. One of the female employees who was discussed in the group reported the employees to her supervisor. She did not file a formal complaint and did not want the matter investigated. Metrolinx, aware of its obligation to investigate, commenced an investigation notwithstanding the absence of a formal complaint and despite the female employee’s request that the matter not be investigated. The investigation was completed and the employment of each of the five employees who sent the messages was terminated for cause based on the conclusions of the investigation.
The five employees filed a grievance which was referred to arbitration. The arbitrator found that the grievors were terminated without just cause. The arbitrator found that a fair and impartial investigation could not be conducted in the absence of a complaint and the complainant’s cooperation, and was in fact critical of the employer for proceeding with the investigation in those circumstances. Had the complainant truly experienced a hostile work environment or felt like she was a victim due to the messages sent by the grievors, she would have filed a complaint, the arbitrator concluded. The arbitrator also found that even if the conduct was inappropriate, it took place outside of the workplace and while the grievors were off duty, and therefore it was not conduct that engaged the legitimate interests of the employer.
Metrolinx applied for judicial review, asserting that the Arbitrator made several unreasonable findings. The Divisional Court agreed. The court found that the Arbitrator’s reasons were wrong in law because they failed to recognize that even where a victim of workplace harassment does not report the harassment or participate in the investigation, the employer retains an obligation to investigate to protect not only the victim, but also others in the workplace. In its decision, the court noted that the Occupational Health and Safety Act requires employers to investigate both complaints and incidents of workplace harassment where no complaint was filed. Once harassment is known to the employer, the obligation to investigate is triggered. The court also noted that engaging in chats outside of the workplace on personal phones and off hours does not necessarily insulate the conduct from employer scrutiny. In this case, the messages made their way into the workplace, and therefore became a workplace issue.
Inna Koldorf is a partner in Miller Thomson LLP’s labour and employment law group, where she advises employers on labour, employment and human rights issues.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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