S1: Enforceability of Termination Clauses: A Noteworthy Ruling in Ontario

GB: Are there any new developments in employment law that have raised your eyebrows in recent months?

BH: I want to talk about a case out of Ontario.¹ The province has become an outlier in that it has become very friendly for the development of case law for non-unionized employees, specifically around termination clauses and what will and will not be enforceable. Employers go from a situation where they think they have an enforceable termination clause that limits an employee’s entitlements to not having the clause anymore.

A recent case involves the township of Ignace.² The town had a fairly standard termination provision, but it was found to be unenforceable by the court for three reasons.

Firstly, they took issue with the reference to base salary, which is not the same as wages, as it doesn’t include commissions, bonuses, vacation pay, and so on. That wasn’t surprising.

Secondly, the employer was going to provide the termination by way of salary continuance as opposed to paying a lump sum. Again, no surprise.

The troubling piece keyed in on the language ‘at any time’. Most people consider ‘at any time’ to be fairly standard, innocuous language. The court found this to potentially breach two sections of the Employee Standards legislation: the section regarding reinstatement after a protected lead and the section related to reprisal for exercising a right under the legislation.

I don’t agree with this analysis. There are other provisions that prohibit terminations for reasons deemed offside. I think it’s bizarre to say that this clause is unenforceable because it purports to allow you to do something that is not actually lawfully allowable. But that’s what the Ontario Supreme Court has decided.

GB: You’re saying that certain details have been ruled offside, causing the entire clause to be unenforceable. The baby is being thrown out with the bathwater, so to speak.

BH: That’s right. The law around restrictive covenants once allowed for arguments to the court for fixing certain clauses in order to bring agreements to a point where they were enforceable. That’s no longer the law around restrictive covenants or termination clauses. One error can have the whole thing thrown out.

GB: What impact will this have on employers elsewhere in the country? How should they prepare?

BH: Obviously this applies to Ontario-based employers, but I think it could have an impact elsewhere in the country as well. While the decision is non-binding, it could be viewed as persuasive by a court in BC or elsewhere. These cases coming out of Ontario will certainly be used by employee side counsel to argue for changes in the law in other jurisdictions, such as British Columbia.

I suspect a lot of employers have that kind of language in their clauses, so it’s an important reminder to be very careful about drafting termination clauses and to review them periodically to ensure that they’re still consistent with the law. It’s essential to make these documents very, very clear and to remove any ambiguities.

S2: Upcoming Review of BC Labour Relations Code

GB: A review of the BC Labour Relations Code is taking place in 2024.³ This will be the second such review conducted by the current provincial government. Can you start by recapping the first review?

BH: The BC Labour Relations Code is what sets the ground rules for unionized environments, becoming unionized, strikes, picketing, and so forth.

When the NDP came to power in 2017 they struck a review of the Labour Code, which was completed in 2018. This review resulted in a number of labour friendly changes to the code and the certification process. The big one was the implementation in 2022 of a single step union certification process, as opposed to a two-step process that involved a vote. It’s now the case that if 55% of a workforce sign cards, there is no longer a need for a ballot vote.

GB: Did those changes move the needle in terms of certification applications?

BH: These changes resulted in an increase of over 50% in certification applications seen by the board in the second half of 2022. I don’t have the numbers for 2023, but anecdotally, I’ve certainly been dealing with a lot more of them than I used to.

GB: What do you anticipate seeing when the next review is complete?

BH: It remains to be seen what the changes are going to be, but given that we have an NDP majority government, I suspect that the update will be labour friendly. It may result in loosening restrictions around where you can picket and changes to successorship language. There were wide consultations and a significant number of recommendations last time around. I wouldn’t be surprised if the second review was a bit more tailored.

GB: When should we watch for this review?

BH: The Review Panel has recently extended the timeline for its final report to the Minister until June 30, 2024. The deadline for submissions is March 22. Hearings will take place throughout April and May.

GB: Do you anticipate this becoming a factor in the provincial election?

BH: The NDP still has a lot of strong union support, and I would expect that the promise of additional labour changes would galvanize some of this support.

S3: Rollout of Pay Transparency Law

GB: As of November 1, 2023, BC’s requirement for companies to publicize compensation data has begun rolling out. Currently, it only applies to government organizations, correct?

BH: As of November 1, 2023, the BC Government and a half dozen of the largest Crown corporations are required to post these reports.⁴ Each year on November 1 the requirement will apply to additional organizations, with 1000 employee organizations coming on board in 2024, 300 employees in 2025, and, finally, 50 employee organizations in 2026.

GB: Explain to us the reasoning behind this legislation.

BH: One of the main goals is the reduction of the gender pay gap, which data shows remains significant in B.C.. This is a public way of trying to combat the gap by having employers put together and publicize pay transparency reports. Having that data readily available is expected to create pressure upon employers to address this gap.

GB: So the legislation doesn’t directly require changes in compensation, it merely forces companies to put their cards on the table?

BH: Correct. It doesn’t require paying a person a certain salary for position X, it instead publicizes rates in order to let market forces and public pressure come into play.  

GB: What’s involved? Do you anticipate any pushback from employers?

BH: The regulations are pretty prescriptive in terms of what’s expected in the content of these reports. It will take time for employers to work through them and ensure that they understand what’s required.

To the extent that pushback does occur, it could be from smaller employers who consider it a strain on resources. It’s hard for employers to take a principled stand against the legislation.

GB: How is compliance, currently?

BH: Given that these rules currently only apply to government and large crown corporations, I expect that compliance is good. It will be interesting to see what happens as smaller and smaller employers are required to come on board. Employers with 50 employees may not have dedicated HR groups and may not even be aware of their obligations, so it could catch people by surprise. There could be a lot of phone calls on October 31, 2026.

GB: A stressful Halloween.

BH: Exactly. They could end up dealing with that instead of handing candy to kids.

The legislation has very good intentions. It will be interesting to see how it gets administered and enforced and what the consequences will be for non-compliance. I’m not sure that the government will be looking down the roster of employers province wide on November 1 of each year.

S4: Remote Workers, Provincial Jurisdiction, and Independent Contractors

GB: What types of issues are arising most frequently with regards to remote working scenarios?

BH: I think the biggest thing for employers to be aware of when considering remote work is where the employee is working. If you’re a BC employer and your employer is working remotely within BC, logistics aside, the legalities are fairly straightforward. The BC Employment Standards Act still applies, as do the BC Human Rights Code, BC Workers Compensation Act and so on.

If your employee moves to another province there arises the potential for jurisdictional disputes. Does BC legislation or Ontario legislation apply?

GB: How are such cases typically decided?

BH: In basic terms, jurisdiction frequently turns on where are you most frequently. If I travel to Alberta and work for two days, there’s not a lot of legs for me to stand in terms of asking my employer to comply with that province’s requirements.

GB: What about freelancers or contractors that are located in other provinces?

BH: Freelance contractors are an entirely different kettle of fish. It does make it simpler for the employer.

GB: How is it determined who is an employee and who is an independent contractor?

BH: There’s reams of case law about whether an individual is an employee or an independent contractor. The big criteria are control, chance of profit, risk of loss, ownership of tools, and these kind of things. The less control you have over when, how, and where you perform your job, the more likely you are an employee. If the individual has a higher level of control over these things, the entity with which you have a relationship will have a better case to assert that you’re an independent contractor.

GB: Are you dealing with a lot of disputes surrounding back-to-office mandates?

BH: I think for most employers and employees it’s becoming increasingly recognized that this is the world we live in now. At least some work can be done on a remote basis. I haven’t seen the amount of fights that I anticipated. There were some a few years back, but it’s decreased considerably.

The big things for employers is to clearly define expectations regarding availability requirements and in-office expectations.

S5: Gig Workers and Bill 48

GB: Bill 48⁵ aims to provide minimum employment standards for British Columbians working in the so-called gig-economy. What is the focus of this bill?

BH: As is the case with most legislation, the focus will be on protecting the most vulnerable. This will be your Uber and Skip the Dishes drivers who may not have a lot of leverage to negotiate things like salaries, wages, benefits, and vacations.

GB: Do you foresee these protections applying to broader contractors, beyond those typically defined as ‘gig workers’?

BH: Oftentimes legislation is a few steps behind society. Changes will continue to occur and there will be more and more freelance work and gig economy work in industries that we might not associate with that type of model. Even in industries like mine, we’d be naïve to say that we’re immune to those kinds of changes. In some ways it’s a natural evolution of labour-ready providers of construction work and so on. It’ll be important for us to continue to watch how this develops.

Cited Sources

1 Direct communication with Brandon Hillis

2 The courts are making life hard for employers, and it’s getting … Accessed February 29, 2024. https://leaderpost.com:443/fp-work/courts-making-life-hard-employers-getting-worse.

3 “Labour Relations Code Review 2024 – GOVTOGETHERBC.” govTogetherBC – Government of British Columbia, February 29, 2024. https://engage.gov.bc.ca/govtogetherbc/engagement/labour-relations-code-review

4 Finance, Ministry of. “Pay Transparency Laws in B.C.” Province of British Columbia, November 14, 2023. https://www2.gov.bc.ca/gov/content/gender-equity/pay-transparency-laws-in-bc.

5 Leg. Accessed February 29, 2024. https://www.leg.bc.ca/content/data%20-%20ldp/Pages/42nd4th/1st_read/PDF/gov48-1.pdf.