You’ve terminated an employee’s employment without cause and offered a reasonable package. You’ve negotiated a settlement, prepared the settlement documentation, and paid out the severance. You thought you dotted all your i’s and crossed all your t’s, but you forgot one crucial part – the former employee never signed the release you prepared. read more…
By Bill Duvall
As the prognosis for Canada’s economy remains uncertain, the Canadian court system continues to churn out employment cases arising from distressed employers. On this front, two recent cases are of interest. In the first, an Ontario court concludes that employees may not be entitled to statutory severance pay when they are provided with pension bridging and supplementary benefits. In the second, a British Columbia court is more employee-friendly, giving a broad interpretation to the definition of wages.
Ontario employees not entitled to severance pay
In Ontario, employees with at least five years’ service are generally entitled to up to 26 weeks’ severance pay when their employer discontinues its business. Employers are exempt from this severance pay obligation when an employee retires on termination and receives an “actuarially unreduced pension benefit that reflects any service credits which the employee, had the employment not been severed, would have been expected to have earned in the normal course of events for purposes of the pension plan.”
As was noted in an earlier article here, the Ontario Superior Court of Justice recently certified a class action against the Bank of Nova Scotia (BNS). That lawsuit claims $300 million in unpaid overtime involving approximately 5,300 BNS sales staff: Fulawka v. Bank of Nova Scotia (Fulawka). Certification means the claims meet the requirements to use the class-action process. What does this decision mean for other similar claims?
A similar previous case, brought against another large bank, CIBC, had not met the certification requirements. It was ruled that that claim lacked the essential element of “commonality” in the situations of the employees in the proposed class: Fresco v. CIBC (CIBC). The breaches alleged in CIBC lacked the “systemic” nature required to justify certification.
Overtime class actions in Canada aren’t dead. If you thought that last year’s court decision refusing to certify the class action against one of Canada’s largest banks, CIBC, meant the death of such lawsuits in Canada, think again.
These lawsuits — in which one or several employees act as a “representative plaintiff” to start a large claim against their employer on behalf of other similarly situated employees — are still showing up, claiming that overtime was worked but never paid. Several recent legal developments in this area, both in Canada and in the United States, should give Canadian employers renewed cause for concern.
Canadian employment law imposes a number of legal duties on employers and employees. One of the key duties is the duty of good faith. The duty of good faith requires employers and employees to act in each other’s best interests. It begins when employment does and can last until after the employment relationship has ended.
There is little dispute that senior employees owe a duty of good faith to their employers. But what about junior employees â€“ do they owe their employers the same duty? Some junior employees may be surprised to learn that they too may owe the same duty of loyalty to their employers depending on their relationship and position.