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Ontario Employer Advisor

Keeping Employers Advised on Developments in Labour and Employment Law

ONCA Affirms an Offer of Employment by the Purchaser of Business Assets to an Employee of the Seller is Valid Consideration for a New Employment Contract

Posted in Common Law Severance, Employment Agreements, Employment Standards, Termination, Transactions, Wrongful Dismissal
Monique RonningAlex Treiber

In Krishnamoorthy v. Olympus Canada Inc., 2017 ONCA 873, the Ontario Court of Appeal confirmed that s. 9(1) of the Employment Standards Act, 2000 (the “ESA”), deems there to be continuity of employment for the purposes of the legislation only, and does not displace the common law rule that an offer of employment by the purchaser of the assets of a business is valid consideration for a new employment agreement.


In May 2000, Nadesan Krishnamoorthy began employment as a senior financial analyst with Carsen Group Inc. (“Carsen”). About five years later, in 2005, Olympus Canada Inc. (“Olympus Canada”) agreed to purchase some of the assets of Carsen, and offered employment to most of Carsen’s employees, including Mr. Krishnamoorthy, then the Director of Finance.

Olympus Canada and Mr. Krishnamoorthy executed a new written employment agreement (the “Employment Agreement”). The terms and conditions of the Employment Agreement were substantially similar to those Mr. Krishnamoorthy had with Carsen, except for two provisions: (a) a termination provision, which limited Mr. Krishnamoorthy’s entitlements upon termination of employment without cause; and (b) a clause stipulating that Mr. Krishnamoorthy would be treated as a new employee with no recognition for previous service with Carsen, except as required by applicable legislation (the “New Terms”).

Olympus Canada did not offer and did not provide Mr. Krishnamoorthy with any additional consideration when he accepted the Employment Agreement, or at any time prior to the commencement of his employment with Olympus Canada.

In May 2015, Olympus Canada terminated Mr. Krishnamoorthy’s employment without cause and provided him severance in accordance with the termination provision in the Employment Agreement. Mr. Krishnamoorthy refused the severance and sued Olympus Canada for wrongful dismissal.

On a motion for summary judgment, Mr. Krishnamoorthy argued that his employment between Carsen and Olympus Canada was deemed to be continuous pursuant to section 9(1) of the ESA, and Olympus Canada’s failure to provide him with fresh consideration in exchange for the Employment Agreement rendered the New Terms unenforceable. Section 9(1) of the ESA reads:

If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.

The motion judge agreed with Mr. Krishnamoorthy’s position and awarded him $310,040.88 in damages for failing to provide adequate reasonable notice of the termination of his employment (equivalent to 19 months’ pay in lieu of notice). Olympus Canada appealed.

The Ontario Court of Appeal Decision

The Court of Appeal overturned the motion judge’s decision, concluding that Mr. Krishnamoorthy could not rely upon s. 9(1) of the ESA for the purpose of establishing that the New Terms were unenforceable for lack of consideration. The Court of Appeal explained that the application of s. 9(1) is limited to deeming employment continuous only “for the purposes of this Act.”

Further, the Court of Appeal affirmed the following statement from Addison v. M. Loeb Ltd., 1986 CanLII 2474 (ONCA), regarding the sale of all or part of the assets of a business:

At common law, since a contract of personal services cannot be assigned to a new employer without the consent of the parties, the sale of a business, if it results in the change of the legal identity of the employer, constitutes a constructive termination of the employment.

If the employee is offered and accepts employment by his new employer, a new contract of employment is entered into.

Thus, the Court of Appeal held that Olympus Canada’s offer of employment was sufficient consideration on its own, and Mr. Krishnamoorthy could not rely on s. 9(1) of the Ontario ESA to rebut that conclusion.


Where the purchaser of all or part of the assets of a business offers employment to a seller’s employee, and the employee accepts, the following common law rule applies: the employee’s employment with the seller is constructively terminated, and a new contract of employment is entered into with the purchaser. Krishnamoorthy affirms that a purchaser’s offer of employment is valid consideration for the new contract of employment between the purchaser and employee, even if the new contract of employment differs from the employee’s previous employment agreement with the seller.

Purchasers must still ensure that all terms in the new employment agreement comply with minimum standards of applicable employment standards legislation, taking into account the employee’s period of service with the seller. In Krishnamoorthy, the Ontario Court of Appeal did not decide the question of whether the termination clause in the Employment Agreement was invalid for failing to comply with s. 9(1) of the ESA; this matter was sent back to the lower court for determination. However, if a termination provision in a new employment agreement with a purchaser fails to provide for the legislated minimum requirement for termination notice, pay or benefits, calculated by reference to the employee’s service as calculated under the ESA, then the termination provision may be found to be invalid, and the employee may be entitled to reasonable notice at common law.

If you have any questions, please let any member of our Labour & Employment group know.

Bill 177 Passes: Changes to the Occupational Health and Safety Act (Ontario) Are Now Law

Posted in Occupational Health and Safety
Ben RatelbandPeter BradyJustine Lindner

Two weeks ago, we reported on the Ontario Government’s introduction of Bill 177, Stronger, Fairer Ontario Act (Budget Measures), 2017, which contained several amendments to the Occupational Health and Safety Act (Ontario) (“OHSA“).  On December 14, 2017, the Bill received Royal Assent and came into force that same day.

Under the new law, the maximum fines per conviction under OHSA are now $1.5 million for corporations and $100,000 for individuals.  Individuals may also be subject to up to 12 months of jail time. In addition, Ministry of Labour prosecutors will now have greater flexibility in the number of alleged violations (or “counts”) they include when laying charges. Finally, the revisions provide for a one (1) year limitation period for bringing charges from the date the Ministry of Labour Inspector becomes aware of an alleged offence, rather than from the date that the alleged offence occurred.

If you have any questions with respect to Bill 177 or occupational health and safety matters more broadly, please contact the authors or any member of our Labour & Employment group.

Bill 177 set to make long anticipated changes to Ontario’s Occupational Health and Safety Act

Posted in Occupational Health and Safety
Peter BradyBen RatelbandJustine Lindner

On November 14, 2017, the Ontario Government introduced Bill 177, the Stronger, Fairer Ontario Act (Budget Measures) 2017. The omnibus Bill proposes to amend 45 separate statutes. On November 30, 2017, the Bill passed second reading and is now before the standing committee on Finance and Economic Affairs. Most notably from the standpoint of the Occupational Health and Safety Act (OHSA), Schedule 30 of the Bill seeks to implement, among other smaller amendments, often discussed and long awaited changes to the allowable maximum fines under the OHSA. Under section 66, the OHSA currently provides for a maximum fine upon conviction of $500,000 per offence for corporations and $25,000 for individuals (plus potential jail time of up to 12 months). These maximum fines have not changed for nearly 30 years.

Given that violations under the OHSA frequently relate to critical injuries or workplace fatalities, some commentators and critics have criticized the current maximum fines as too low to adequately provide a deterrent effect. Comparisons are often made to Ontario’s environmental protection statutes where maximum fines for corporations can reach $6 to $10 million for the most serious classes of offences. Bill 177 would see the maximum fine per conviction under the OHSA rise to $1.5 million for corporations and $100,000 for individuals. It can be predicted that if the amendments become law (which is expected), the Ministry of Labour will argue for higher penalties. The proposed changes will also provide Ministry of Labour prosecutors with greater flexibility in the number of alleged violations (or “counts”) they include when laying charges.

Additionally, the Bill seeks to make changes to the one (1) year limitation period within which charges can be initiated. Currently, section 69 of the OHSA creates a one (1) year limitation period from the date of the alleged default or violation. The proposed amendment would extend the limitation period to one (1) year from the date the Ministry of Labour Inspector becomes aware of the alleged offence. The addition of a “discoverability” component will again bring the OHSA in line with other regulatory statutes such as the Environmental Protection Act. The discoverability component will not likely come into play for the most common OHSA violations such as critical injuries, where the date of the event and the point at which the Ministry of Labour become aware of the violation usually coincide. However, for historical, non-injury related allegations that do not immediately come to the attention of the Ministry of Labour (e.g. failing to take prescribed actions or violations relating to engineering reports), a prosecution may be initiated well after the date of the event.

We will continue to monitor the progress of the Bill and will provide updates when the amendments are in force.  If you have any questions with respect to the Bill or occupational health and safety matters more broadly, please contact the authors or any member of our Labour & Employment Group.

Counting Down to December 31, 2017 – Don’t Forget About Your AODA Compliance Report

Posted in Accessibility
Kate McNeill-Keller

A quick reminder that pursuant to the Accessibility for Ontarians with Disabilities Act, 2005 (Ontario), Ontario private sector businesses with twenty or more employees are required to file a compliance report every three years.  The next deadline is fast approaching – December 31, 2017.

If you have not already completed your report, you will need to go online to do so on the Government of Ontario website.   You will need your organization’s legal name, business (BN9) number, number of employees and the name and contact information of your certifier (a director or senior officer with legal authority to say that the report is complete and accurate).

If you have any questions with respect to your organization’s obligations either with respect to the compliance report or under the AODA more generally, please contact Kate McNeill-Keller or any of our Ontario Labour & Employment lawyers.

BILL 148 PASSES (but not before a few last-minute changes were made)

Posted in Employment Standards, Labour Relations, Occupational Health and Safety
Tim LawsonMatthew Demeo

On Wednesday, November 22, 2017, the Government of Ontario passed Bill 148, the Fair Workplaces, Better Jobs Act, 2017. Introduced on June 1, 2017 as a response to the Final Report of the Changing Workplaces Review, Bill 148 makes significant amendments to Ontario’s Employment Standards Act, 2000, Labour Relations Act, 1995 and most recently, the Occupational Health and Safety Act. As many are aware, aside from the highly publicized $15 Minimum Wage, Bill 148 will require employers to make significant changes to their policies and practices.

Bill 148, the Fair Workplaces, Better Jobs Act, 2017 has now passed Third Reading and is awaiting Royal Assent. Prior to passing, some last minute, but significant, changes were made to the Bill. Most significant, perhaps, was the inclusion of paid leave for the first five days of Domestic or Sexual Violence Leave. As we recently reported, the new leave allows employees to take up to 17 weeks off work, in a flexible manner, to deal with matters related to domestic or sexual violence. Other significant amendments that were made to Bill 148 prior to it becoming law include:

  • The addition of a Critical Illness Leave;
  • The expansion of Family Medical Leave;
  • The expansion of the list of professionals who can certify statutory leaves;
  • A revision to the “three-hour rule” that will entitle employees to more pay guarantees;
  • Exceptions to the on-call and scheduling rules for employers who provide essential public services;
  • Clarification that for Equal Pay for Equal Work to apply, the duties performed by workers do not necessarily have to be identical, but rather “substantially the same”;
  • Deletion of the hours-based “seniority system” exception to Equal Pay for Equal Work;
  • The expansion of what employee information may need to be provided to a union during a union organizing drive; and
  • A ban on mandatory high-heeled shoes in the workplace under the Occupational Health and Safety Act (except for the entertainment industry).

Aside from the above noted changes, the other major reforms proposed by Bill 148, which we wrote about here and here, such as the movement to a $15 minimum wage, paid emergency leave and equal pay for part-time, contract and temporary employees, are set to come into force in the near future. In fact, the majority of changes will come into effect on January 1, 2018. As a result, employers should be preparing for these changes now.

In the interim, the Labour and Employment Group at McCarthy Tétrault LLP has reviewed the final version of Bill 148 and released a paper titled Bill 148 IS NOW THE LAW, WHAT NEXT? A Timeline of Implementation. If you would like a copy of this paper, or have any questions about Bill 148 and how it will impact your workplace, do not hesitate to contact Tim Lawson or Matthew Demeo, or any lawyer in our Ontario Labour and Employment Law Group.

Federal Government Introduces New Amendments to the Canada Labour Code to Address Workplace Violence and Harassment

Posted in Federally Regulated Employers, Occupational Health and Safety, Sexual Harassment, Workplace Harassment, Workplace Investigations, Workplace Violence
Tim LawsonBen RatelbandAlex Treiber

The Federal Government has recently introduced Bill C-65, An Act to amend the Canada Labour Code (harassment and violence), the Parliamentary Employment and Staff Relations Act and the Budget Implementation Act, 2017, No. 1, which provides for significant changes in how federally-regulated workplaces must address workplace violence and harassment. Bill C-65 follows a year-long public consultation commissioned by the Ministry of Employment, Workforce Development and Labour that concluded that harassment and violence in workplaces is underreported and not dealt with effectively when reported. Bill C-65 seeks to enhance the current legislative framework, which was originally intended to apply to workplace accidents and did not apply to the public service nor to employees on Parliament Hill.

Bill C-65, if passed into law in its present form, would impose several new duties on employers. Employers would be required to investigate, record and report, in accordance with the requirements that would be prescribed in regulations, all occurrences of harassment or violence. In addition, employers would have to take certain prescribed measures to prevent and protect against harassment and violence in the workplace, respond to occurrences of harassment and violence in the workplace, and offer support to employees affected by harassment and violence. The scope and content of these regulations is unknown.

Under Bill C-65, an employee may request that an unresolved complaint relating to an occurrence of harassment or violence be referred directly to the Minister of Employment, Workforce Development and Labour. The Minister would not be obligated to investigate if they are of the opinion that the complaint has been adequately dealt with via another federal statute or by collective agreement or if they are of the opinion that the matter is trivial, frivolous or vexatious.

The Bill also includes significant measures to protect the privacy of complainants and respondents involved in a workplace harassment or violence investigation. Workplace committees, policy committees and health and safety representatives would not be permitted to participate in investigations into workplace harassment or violence. Unless consent has been provided, the employer would be obligated to ensure that workplace committees, policy committees or health and safety representatives are not provided with any information that is likely to reveal the identity of a person involved in a workplace violence and harassment investigation. These measures are in response to the government’s determination that fear of retaliation is keeping some workers from reporting harassment or violence in the workplace.

Although the Bill would only apply to federally-regulated employers, many of these changes are in line with the current legislative framework in Ontario for provincially-regulated employers under the Occupational Health and Safety Act.   Employers in Ontario are currently required to maintain workplace harassment and violence policies and investigate complaints related to workplace violence and harassment. A failure to comply with the Occupational Health and Safety Act can result in steeps fines from the Ministry of Labour. It remains to be seen if Bill C-65 will incorporate any additional enforcement mechanisms or fines to ensure compliance.

Bill C-65 is currently in First Reading in the House of Commons. We will continue to provide further updates on the Bill as it progresses. In the interim, if you have any questions regarding Bill C-65, do not hesitate to contact any lawyer in our Labour & Employment Law Group.

Employment and Labour Law Reform Bill Passes Second Reading

Posted in Employment, Labour Relations
Tim LawsonMatthew Demeo

In addition, the Ontario Government will seek public input on occupations currently exempted from the Employment Standards Act, 2000.

Bill 148, the Fair Workplaces, Better Jobs Act, 2017 has passed Second Reading and is now one step closer to becoming law. Bill 148 proposes significant changes to Ontario’s Employment Standards Act, 2000 (“ESA”) and Labour Relations Act, 1995 (“LRA”).  As we recently reported, Bill 148 underwent some changes this past summer at the Committee Stage. Most significant perhaps, was the addition of a standalone Domestic or Sexual Violence Leave under the ESA which would allow employees with a least 13 weeks of service to take up to 17 weeks of unpaid leave per calendar year.

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Ontario’s Employment and Labour Law Reform Bill Continues to Undergo Changes

Posted in Immigration
Tim LawsonMatthew Demeo

Just as the summer winds down, we have an update on Bill 148, the Fair Workplaces, Better Jobs Act, 2017.  Those who tuned-in for the McCarthy Tétrault webinars on Bill 148 will recall that public consultations were to be held across the province in July to elicit feedback on the draft Bill.

Following the public consultations, we understand that Bill 148 will undergo some adjustments before it is introduced at Second Reading in the Ontario legislature, including:

  • addition of a 17 week, unpaid Domestic or Sexual Violence Leave;
  • clarification that the paid emergency leave days will be paid at straight time and not at an overtime or shift premium rate;
  • an exemption for weather-dependent businesses from the mandatory 3 hours of pay when shifts are cancelled on less than 48 hours’ notice; and
  • an exemption for emergencies or threats to public safety from the right to refuse work on less than 96 hours’ notice.

The majority of Bill 148 still seems to be intact, including the minimum wage increases and equal pay for equal work. The actual language of the amended Bill 148 will likely be available once the legislature resumes in September, prior to Second Reading. We will provide further updates on the status and content of the Bill as it progresses.

In the interim, if you have any questions about The Fair Workplace, Better Jobs Act, 2017 and how it will impact your workplace, do not hesitate to contact Tim Lawson, Matthew Demeo or any lawyer in our Ontario Labour and Employment Law group.

Federal Government Restores Former Certification and Decertification Processes for Unionization in Federal Workplaces

Posted in Federally Regulated Employers, Labour Relations, Union Certification, Unions
Tim LawsonJustine LindnerAkiva Stern

Three years ago, the Federal Government passed the Employees’ Voting Rights Act, which reformed the Canada Labour Code’s certification and decertification rules for federally regulated workplaces.

The most significant change was the removal of the 50 year old “card check” system. Card check allowed a union to be automatically certified without a vote when it could demonstrate that the majority of the employees in the proposed bargaining unit has signed membership cards and paid a nominal fee.

The other change was lowering the threshold for support for decertification from 50% +1 to 40%.

In Bill C-4, An Act to amend the Canada Labour Code, the Parliamentary Employment and Staff Relations Act, the Public Service Labour Relations Act and the Income Tax Act, the current Federal Government has reversed those changes.

Bill C-4 Restores the Former Certification and Decertification Requirements

Bill C-4 comes into force on June 22, 2017 and restores the certification and decertification processes to their prior status.  The key amendments to the Canada Labour Code under Bill C-4 are as follows:


  • Mandatory secret ballot for all certification votes is repealed. A secret ballot vote will now only be required where a union demonstrates evidence of support of 35-50% of the proposed bargaining unit.
  • If a union provides membership evidence of more than 50% of the employees in the proposed bargaining unit, the union may become certified without a secret ballot vote.


  • Bill C-4 raises the threshold for decertification of a union from 40% back to 50% +1.

Financial Disclosure Obligations

  • Bill C-4 also repeals the financial disclosure obligations of unions set in motion through Bill C-377 under the Income Tax Act.

Transition Provisions: How Does Bill C-4 Affect Recent Applications for Certification or Decertification?

The amendments to the Canada Labour Code under Bill C-4 will only apply to applications for certification or decertification filed with the Canada Industrial Relations Board after June 22, 2017.  Any applications filed with the Canada Industrial Relations Board prior to June 22, 2017 will be subject to the requirements and thresholds under the previous Bill C-525.

In the Pipeline for 2017: The Right to a Flexible Work Arrangement

The Federal government continues to deliberate over how to provide full-time federal employees with rights to flexible work. We expect to see proposed amendments to the Canada Labour Code in the coming months. We also expect to see changes which limit unpaid internships and introduce an 18 month parental leave.

If you have any questions with respect to these changes or the Canada Labour Code more generally, please contact any member of our National Labour & Employment Group.

Beyond the Final Report: Government of Ontario charts its own course following the Changing Workplaces Review

Posted in Employment Standards, Labour Relations
Tim LawsonSean PorterMatthew Demeo

Last week, we reported on the Government of Ontario’s release of the Changing Workplaces Review Final Report, which comprehensively reviewed Ontario’s Employment Standards Act, 2000 (the “ESA”) and Labour Relations Act, 1995 (the “LRA”). Today, the Government of Ontario announced its intention to introduce The Fair Workplace, Better Jobs Act, 2017 in response to the 173 recommendations provided by the Final Report.

Notably, the Government of Ontario has proposed several changes that were either not among the recommendations put forward in the Final Report or that substantially diverge from the Final Report’s 173 recommendations, including:

  • Increasing the general minimum wage from $11.40 to $14.00 per hour on January 1, 2018 and then to $15.00 per hour on January 1, 2019. According to the announcement, distinct minimum wage rates for categories of specified workers (e.g. students, liquor service, hunting and fishing guides) would be maintained, though these wage rates would also be increased for 2018 and 2019.
  • Providing 10 days of personal emergency leave (PEL) to all employees per year, including two paid PEL days. According to the announcement, the 50 employee threshold for PEL entitlement would be eliminated. Employers would also be prohibited from requesting a sick note from an employee taking PEL.
  • Prohibiting the misclassification of “employees” as “independent contractors”. Employers who misclassify employees in this manner may be subjected to prosecution, including public disclosure of a conviction and monetary penalties. However, the definition of “employee” under the ESA will not be expanded to include a dependent contractor.
  • Establishing card-based union certification for the temporary help agency industry, the building services sector and home care and community services industry.
  • Preventing employers from disciplining or discharging employees without just cause in the period between certification and the conclusion of a first collective agreement, as well as during the period between the date the parties are in a legal strike or lock-out position and the conclusion of a new collective agreement

The Government of Ontario has also opted to include several significant recommendations from the Final Report, including:

  • Enhancing employment standards enforcement by hiring up to 175 more employment standards officers. Once these officers are hired by 2020-2021, their aim will be to resolve all claims filed within 90 days and to inspect 1 in 10 Ontario workplaces.
  • Allowing unions to access employee lists and certain contact information, provided that the union can demonstrate that it has achieved  support of 20% of the employees involved.
  • Allowing the Ontario Labour Relations Board (OLRB) to consolidate newly certified bargaining units with other existing bargaining units under a single employer, where those units are represented by the same bargaining agent.

Should the proposed legislation pass, as it is expected to, most of the revisions to the ESA will become effective January 1, 2018.  All revisions to the LRA will come into effect six months after the Act comes into force.

The Government of Ontario is expected to introduce the final legislation in the coming months and we will continue to report on its development through the legislature. If you have any questions about The Fair Workplace, Better Jobs Act, 2017 and how it will impact your workplace, do not hesitate to contact Tim Lawson, Matt Demeo, Sean Porter, or any lawyer in our Ontario Labour and Employment Law group.