How do these contracts affect employees?

When Morris Wernicke agreed to join Altrom Canada Group in 1997, he also agreed to a written employment contract. Wernicke, a chartered accountant, carefully read the contract and even sought the advice of his lawyer before agreeing to its terms. 

The contract contained a clause that would permit Altrom to terminate Wernike with the greater of 30 days’ notice or the minimum amount he was supposed to receive under provincial legislation and a clause that the contract would continue to apply even if Wernike’s job later changed. 

Although Wernike’s job continued to evolve over time, a new employment contract was never prepared.   

When Wernike’s position was eliminated in 2009, he was offered six months’ severance.  However, after 12 years of employment in a very senior role, Wernike thought that he was entitled to much more.

At a recent trial in British Columbia, the company defended the case by arguing that Wernike’s original employment contract for the controller’s position applied when he was terminated from a more senior role almost 12 years later. The court agreed. Although the contract significantly limited Wernike’s entitlement to severance, the court was not prepared to set it aside.  Wernike knew what he had agreed to when he started work and his job did not change so dramatically that the contract did not apply when he was later let go.      

Without an employment contract, the law will imply a number of employee-friendly terms.  The right to termination only with reasonable notice, the right to ensure that fundamental terms, such as salary and position are not unilaterally changed, and a right to compete with ex-employers following departure are a few rights that simply exist even without a contract stating it is so. 

Employers and employees can agree that these “implied rights” will not apply by agreeing on other written terms. However, since employers regularly draft these contracts in their favour, employees should carefully consider what they are agreeing to or whether they should agree to a contract at all. 

Also see “Beware of employment contracts – most contain employer friendly terms”

– Daniel A. Lublin is an employment lawyer with the law firm Whitten & Lublin LLP.  Reach him at dan@toronto-employmentlawyer.com

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Many people in the workforce often wonder what reasonable consequences or “penalties” employers can impose on employees as a result of performance issues or misconduct.  The answer to this question will vary depending on the circumstances of every case.  That said, employees and employers alike should know that Canadian courts have consistently upheld the legal doctrine of progressive discipline.

Progressive discipline, as the name suggests, contemplates the gradual escalation of disciplinary action by an employer.  Pursuant to this concept, employers should avoid jumping the gun in handing down “penalties”.  For example, if an employee violates a safety policy in the workplace by failing to wear the proper safety gear, it would be unreasonable and unfair for the employer to immediately suspend or dismiss the employee for the infraction.  A court would likely view such consequences as being premature.

In instances where an employee’s performance or conduct is at issue, the employer should clearly provide the employee with the following:

• An explanation of the problem;
• The steps that should be taken by the employee to correct the problem;
• Offer assistance to the employee to help correct the problem;
• A timeframe within which the problem is expected to be remedied; and
• The further disciplinary actions that may be imposed if the problem persists.

If followed, this disciplinary model encourages the early detection by management of problems involving employees and the opportunity to address them before they escalate beyond the point of no return.  Further, it allows employees to understand any problems with respect to their conduct or performance and provides them with the opportunity to take the steps required to remedy the situation and maintain their employment.

Progressive discipline implements a process which helps to prevent the premature imposition of disciplinary action by management.  If respected, it decreases the chances of successful wrongful dismissal lawsuits against employers.  If not respected, it provides employees with recourse against their employers.

Cedric P. Lamarche is a lawyer with Whitten & Lublin LLP, an employment law office assisting both employers and employees on various workplace legal matters.

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Veteran investment banker Kenneth Mathieson was well rewarded in his good years. In 2005, he earned a bonus of $1.1 million. However, when his employer, Scotia Capital, decided that he deserved only $360,000 in 2006 — the lowest bonus he had ever received — Mathieson believed the bank was attempting to force his resignation. He wasn’t about to go quietly.

Mathieson complained to management, who listened to his concerns, but remained firm in their decision: his 2006 performance was not at par with his colleagues, which led to his low bonus award. Eventually, fed up with Mathieson’s protests, the bank fired him. Mathieson sued, claiming that his bonus had been reduced in bad faith, among a handful of other claims

To read the full article, visit Daniel Lublin’s columnist page at Metro News.

Daniel Lublin is an employment lawyer focusing on the law of dismissal.  He can be reached at dan@toronto-employmentlawyer.com

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In a recent article published in the Globe & Mail, Tavia Grant reviews the unemployment numbers that have recently plagued Canadians, with a focus on recent increases in jobs.

According to Ms. Grant’s article, 43,000 new Canadian jobs were created in January alone. This increase resulted in Canada’s jobless rate falling from 8.5% to 8.3%. At first blush, this figure appears encouraging for unemployed Canadians who have had to face a depleted employment market in the past year. However, Canadians should be careful in assuming that the strong numbers in recent months, especially in January 2010, reflect a speedy recovery. As the economy readjusts after having faced one of the biggest hits in Canadian history, we are not out of the woods just yet.

In fact, Ms. Grant emphasizes in her article that the current employment rate remains significantly below its level in late 2008. Further, she points to the fact that lately, the monthly employment numbers have been “volatile”. This volatility in the numbers could very well continue as the Canadian economy emerges from the recession.

According to Ms. Grant’s article, some examples of the factors contributing to the unpredictability of job numbers in Canada include: employers requiring their employees to work longer hours instead of hiring, and the likely wind down of positions in the health care sector now that the H1N1 vaccination program, which resulted in a surge of temp jobs in December, is coming to an end.

Another factor which may have an impact on the unemployment rate in Canada is the Federal Government’s proposed increase of Employment Insurance premiums starting in 2011. In order to address the deficit, Ottawa is expected to present a plan which includes, among other things, increases in EI premiums for both Canadian employers and employees. This could very well become a disincentive for employers, especially in small businesses, from hiring new staff and consequently further depress job growth in Canada.

Although recent trends point to a recovery, Canadians should not assume that the employment market will recover at a pace consistent with recent decreases in unemployment. We are currently undergoing an economic transitional phase and many factors may very well impact Canadian jobs, for the best or for the worst.

Cedric P. Lamarche is a lawyer with Whitten & Lublin LLP, an employment law office assisting both employers and employees on various workplace legal matters.

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When they work hard, they get a bonus. When their service is long and meritorious, they may get a good severance package or pension. When they knowingly break their employer’s rules, however, they often are fired for cause and get nothing at all.

Canadian courts have little tolerance for employees whose computer habits expose their companies to liabilities. This is because in every province there is legislation that is interpreted as requiring employers to provide a harassment-free workplace. As well, given the potential risks to employers, it is clear that they can monitor an employee’s use of computers, BlackBerrys or any other equipment that uses its servers – and they often can do so without notice.

There is a tale of two employees who misused their computers at work and the consequences they reluctantly faced.  To read the full article, visit Daniel Lublin’s weekly column page at Metro News.

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Independent contractor agreements: It usually will not matter that workers have signed agreements confirming they are not employees. Employers, happy to unburden themselves from various costs and liabilities associated with employees, increasingly retain “contractors” to perform the same services their employees did before. Often, those same employees are seamlessly turned into contractors. And the former employees, content to pay their own taxes, are not about to complain. When this characterization is challenged, sometimes many years later, courts are apt to find the workers were truly employees. No surprise there. The contract represented little else than a “label.” Seldom will this be sufficient.

Post-employment restrictions: Many contracts contain broad restrictions preventing workers from competing with their former employers or soliciting their old clients following their departure. In certain cases, such as where an employer is vulnerable to an ex-employee, such agreements can stick. But in many others, they will easily be struck down. This is because employers often take a kitchen sink approach to drafting employment contracts. They bargain for excessive protection, no matter how junior or administrative the employee. Clients will not usually follow a junior employee, so a clause restricting that employee from competing with his former employer is not likely reasonable. According to a recent case, restrictive covenants are only enforceable “if reasonable between the parties and with reference to the public interest.” In general, the more one-sided a non-solicitation or non-competition agreement, the less likely a court will respect it.

Policy manuals: In one recent case, the employer argued that since the employee had not reported harassment as she was required to under the company’s policy manual, the company could not take any steps to address it. As a result, it argued, it was the employee who had breached the employment relationship, not the harasser. The court easily dismissed this notion. Although terms in a policy manual can sometimes operate as conditions of an employee’s job, those terms must be reasonable or they will not be upheld.

Termination clauses: Similarly, contractual language surrounding termination is often challenged. This is because even without a contract, there is an implied right to reasonable treatment upon termination. Why would anyone agree to anything less? Seldom do employees negotiate contracts on the same footing as their employer. Therefore, courts have developed a number of tests. If the contract is ambiguous, fails to respect statutory standards or is executed under duress, it will be set aside.

Daniel Lublin is an Employment Lawyer with the law firm Whitten & Lublin LLP.  He can be reached at dan@toronto-employmentlawyer.com

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Today, much of the workforce views a manager’s criticism as “bullying” or “harassment.” As toxic bosses have become a greater liability, their employees no longer call their doctors seeking a note for a leave of absence. Now they call their lawyers. But as harassment is often in the eye of the beholder, when will a tough boss justify a successful lawsuit? 

The entire workplace law column, originally published in the Metro News, can be read here.

Daniel A. Lublin is an employment lawyer with the law firm Whitten & Lublin LLP. Reach him at dan@toronto-employmentlawyer.com

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For many businesses, customers and clients are hot commodities. In an age where “googling” a few key words can generate an infinite list of hits, businesses attract and retain clients not only as a result of the good deals they offer, but also as a result of the relationships that exist between their clients and the business’ employees. Since employees frequently move from one employer to the other, it’s no surprise that many employers often try to protect their customer and client pools by including restrictive clauses in their employment contracts. Examples of restrictive clauses that have been included in employment contracts and that have been upheld by the courts include non-competition and non-solicitation provisions.

As one can imagine, when employees leave their employment to pursue other opportunities, legal issues often arise as a result of restrictive provisions. On the one hand, businesses want to protect their client base and their proprietary information and, on the other hand, employees want to continue working in the same industry and continue servicing those clients with whom they have cultivated relationships over time. The courts will generally deal with these types of disputes cautiously as a result of the various policy concerns, including the fact that restrictive clauses often limit an individual’s ability to work in their craft or in their field of expertise.

In a recent case before the Alberta Court of Queen’s Bench, the court considered how far an employer should be permitted to go in imposing restrictive clauses to an employee who was already working for the employer. In doing so, it confirmed many of the rules that employers should follow in order to ensure the existence of fair contractual terms between parties that are often on unequal footing.

Accordingly, employers who wish to protect themselves should consider playing by the following rules:

• Employment agreements should ideally be concluded before an employee starts work.

• If an employer wishes to create a written employment contract or modify an existing contract midway through an employer/employee relationship, it should:

o provide something of value to the employee in exchange for signing the contract;

o advise the employee to consult legal counsel, and confirm this in writing;

o explain the restrictive clauses to the employee;

o inform how, if at all, the employment role will change if the employee refuses to sign the contract

o Ensure that the restrictive clauses are relevant to the employee’s position (i.e. not overly broad and too onerous with respect to the position).

Cedric Lamarche is a lawyer with Whitten & Lublin LLP, an employment law office assisting employers and employees on various workplace legal matters. .

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The recent and very public locker room gun-pulling incident between NBA players Gilbert Arenas and Javaris Crittenton has highlighted the importance for employers to create and enforce policy on workplace safety.

As many sports fans know, Arenas and Crittenton have now been suspended by the league for the remainder of the 2009-2010 season for brandishing guns in the Washington Wizard’s locker room. Some may interpret the NBA’s actions as “making an example” of the payers. Others, such as myself, see it as the league legitimizing and enforcing it’s policy outlined in the collective bargaining agreement; An agreement produced by the collective efforts of the NBA owners and the Players’ Union.

As previously mentioned by Daniel Lublin, if an employer wants to lean to it’s policies in support of a lawsuit, it is important for them to circulate and enforce clearly worded company policy.

With the introduction of Bill 168 in Canada, the issue of workplace safety regarding violence has been a hot topic as of late. The incident between Arenas and Crittenton and the manner in which the NBA dealt with it is a good example for all employers to take notice of.

Brian Norris is the Office Manger of Whitten & Lublin LLP, an employment law office providing counsel to both employers and employees.

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