Articles:

1. Lay off the Termination Clause: Invalid Termination Provisions will not Terminate a Temporary Layoff Provision
2. To Deal or Not to Deal (With Employees Without Their Union)
3. New Season, New Requirements for Workplace Harassment Prevention Policies in Nova Scotia

 

Lay off the Termination Clause: Invalid Termination Provisions will not Terminate a Temporary Layoff Provision

Qasid Iqbal

In recent cases, termination provisions in employment agreements have been heavily scrutinized and frequently invalidated. The recent case of Taylor v. Salytics Inc. raised the new question of whether a temporary layoff provision should be considered part of the termination clause, potentially creating an avenue for such clauses to be ruled unenforceable similar to non-compliant termination provisions.

In its decision, the Ontario Superior Court of Justice, emphasizing that “it is the substance that matters, not the form” when interpreting employment contracts, confirmed that a temporary layoff provision is not a termination provision and ultimately found the clause in question to be enforceable.

The Contract

Mr. Taylor, worked for Salytics for 11 years as a Senior Technical Consultant before being placed on an unpaid temporary layoff due to Salytics’ financial difficulties. His employment agreement contained a clause consisting of the following provisions:

Salytics may terminate your employment at any time for cause.

Salytics may terminate your employment without cause at any time by providing you with the minimum notice, or pay in lieu of such notice, and any severance pay required by the Employment Standards Act, 2000 and no more except in the event a lay-off is required within the first six (6) months of your employment without cause, you will be entitled to continue receiving salary up to the end of this six-month period.

In the event a temporary lay-off is ever required, it may be implemented in accordance with the requirements of the Employment Standards Act, 2000.

Although Mr. Taylor was later recalled to work, he alleged the layoff amounted to constructive dismissal and claimed wrongful dismissal damages for the time he spent out of work. The key issues before the Court were whether the temporary layoff provision was enforceable, and whether it formed part of the termination clause.

The Parties’ Positions

It has long been held that any attempt to contract out of the Employment Standards Act, 2000 (the “ESA”), or any ambiguity or omission in a termination provision, will be interpreted against the employer and may render the entire termination clause void. Indeed, an invalid “with cause” provision will also invalidate the without cause provision, and vice versa.  This is because, following Waksdale v. Swegon North America, courts are required to interpret an employment agreement’s termination clause as a whole, rather than on a “piecemeal basis”.

In Taylor, it was found that the “for cause” provision in the termination clause breached the ESA,  because it purported to allow for dismissal with no notice or pay. Accordingly, the without cause provision was also invalidated. The remaining question was whether the temporary layoff provision would also be struck down as part of the termination clause. Mr. Taylor argued that the temporary layoff provision was embedded in the termination section and thus formed part of the overall termination clause.

Salytics maintained that the temporary layoff provision was not a termination provision at all, temporary layoffs being conceptually distinct from ending the employment relationship. Accordingly, the nullification of the cause provision did not invalidate the contract’s layoff right.

The Court’s Analysis

The issue before the Court was whether the form of the contract was more important than its substance, and its decisive answer was “no.” The Court agreed with the employer that the layoff provision was not a termination provision in substance, meaning it remained enforceable despite the nullified cause provision. This determination meant that Mr. Taylor’s temporary layoff did not trigger any entitlements that would be to him due upon termination. The mere placement of the layoff provision under the “termination” section of the employment contract was not determinative. The Court ruled that what mattered was the actual function of the provision, not its label or where the drafter placed it in the contract.

Fundamentally, a temporary layoff is not intended to sever the employment relationship. The Court affirmed that without a contractual layoff provision, employers unilaterally suspending work and pay is indeed a constructive dismissal (i.e. termination) at common law. A valid layoff provision, however, gives employers the right to temporarily reduce work without severing the employment relationship. The substance of the right is to pause the employment, not terminate it, distinguishing the layoff provision from the “for cause” and “without cause” termination provisions.

The Court’s decision was also informed by s. 56(4) of the ESA which holds that a temporary layoff “shall not be considered to terminate the employment of an employee” within prescribed time limits, with which Salytics complied.

Key Takeaway

The Taylor decision reinforces the principle that clarity and compliance in contract drafting are paramount. Without an explicit and enforceable layoff provision, a temporary layoff runs the risk of being deemed a constructive dismissal giving rise to various termination and severance obligations. A temporary layoff provision, properly crafted, can provide employers with the necessary flexibility to adapt to business needs without incurring termination liability, and can survive even if the termination clause fails.

 

To Deal or Not to Deal (With Employees Without Their Union)

Sherry Yu

In a recent British Columbia arbitration decision, the Arbitrator held that the unilateral payment of a hiring incentive to potential new employees, without the agreement of the union, did not constitute direct dealing with employees and did not breach the union’s exclusive bargaining agency.

This case is significant because it further clarifies what is and is not considered a “term of employment” in the context of unionized employment, and confirms that even with the presence of a union employers are permitted to enter into certain pre-employment contracts with employees directly.

Background

In general, once an employer’s workforce is unionized, the union is legally certified to act as the exclusive bargaining agent for all employees within the bargaining unit, and the employer is required to negotiate only with the union on matters relating to terms and conditions of employment, including compensation, and can no longer deal directly with employees on such matters.

In British Public School Employers’ Association (“BCPSEA”) v British Columbia Teachers’ Federation (“BCTF”), the union filed a grievance alleging that the employer was engaging in direct dealing with employees by offering unilateral monetary incentives to new hires, and was therefore in breach of the union’s exclusive bargaining agency.

BCTF represents all teachers in a province-wide bargaining unit that includes 60 different employers. BCPSEA is an employers’ association representing those 60 employers. In an agreed statement of facts, the parties agreed that the monetary incentives were intended to address longstanding recruitment challenges particularly for French teachers and certain rural and remote school districts. The BCPSEA had authorized, and certain employers offered, a lump-sum payment to new hires for accepting an offer of employment, and after accepting the offer the money was paid either before or on the employee’s first pay cheque.

The heart of the dispute was whether the BCSPEA and the individual employers had the ability to offer such incentives at the time of hire without the agreement of the union. The Union’s position was that, while it recognized the importance and challenges of attracting capable and qualified teachers to the public education system, it had a legal and statutory responsibility to negotiate those incentives. BCSPEA argued that such incentives were permissible because they constitute a “pre-employment monetary incentive” and as such fell outside of the union’s exclusive bargaining agency.

The Award

The Arbitrator held that the hiring incentives were not a term of employment that was within the scope of the union’s exclusive bargaining agency. In so ruling, the Arbitrator based her conclusion on three key findings:

1. the hiring incentives were not, by their nature, a term of employment or compensation presumptively within the union’s exclusive bargaining agency;
2. the terms of the collective agreement, in light of the parties’ complex bargaining relationship, did not show that the hiring incentives were impermissible if offered to an existing teacher employed by a different employer; and
3. neither the express nor implied terms of the collective agreement showed a mutual intention that pre-employment monetary incentives, falling properly within offer and acceptance must be bargained with the union.

In determining whether the specific hiring incentives as structured were by their nature a term of employment, the Arbitrator concluded as follows:

“In summary, I find the terms of the Hiring Incentives did not have a carry-over effect that extended into the ongoing employment relationship. As such, for the purposes of this Award, I disagree with the Union’s central position that the Hiring Incentives presumptively constitute direct dealing with an employee in respect of compensation or a term of employment that must be bargained. Like Ontario Power, there were no strings attached to the payment, such as periods of service, nor was there an obligation to repay the money if periods of service were not met. While acceptance resulted in the creation of an employment relationship with an Employer, that was subject to the terms of the relevant working document, the timing of the payment was one of administrative convenience and did not substantively alter the nature or purpose of the Hiring Incentive. As such, I find the Hiring Incentives did not impermissibly extend beyond offer and acceptance, nor did they constitute compensation falling within the Union’s exclusive bargaining agency.”

Key Takeaways for Employers

Although every case will necessarily turn on its own facts, BCPSEA v BCTF confirms that matters relating to the pre-employment stage of offer and acceptance, absent language in the collective agreement bringing such matters within the scope of the union’s exclusive bargaining agency, remain within the purview of the employer to negotiate directly with a potential new employee.

If you have unionized employees and have any questions or concerns about the scope of the union’s exclusive bargaining agency and what you can and cannot do without the agreement of the union, please contact a Mathews Dinsdale lawyer.

 

New Season, New Requirements for Workplace Harassment Prevention Policies in Nova Scotia

Sarah Gray

In August, the Government of Nova Scotia published the much-anticipated Workplace Health and Safety regulations to the Occupational Health and Safety Act (the “OHSA”) outlining new requirements for workplace harassment prevention policies. The published regulations follow the proposed amendments to the OHSA announced by the Provincial Government last year, in service of formally recognizing workplace harassment as a health and safety issue. The regulations now require employers to address workplace harassment, and establish and implement a workplace harassment prevention policy. These requirements have been in effect since September 1, 2025.

Definition of Workplace Harassment

The definition of “workplace harassment” in the amended Workplace Health and Safety Regulation mimics the definition used in the workers’ compensation scheme. The definition includes unwelcome conduct, comments or actions in the workplace, and bullying based upon personal characteristics and inappropriate sexual conduct, but excludes actions of the employer relating to the management and direction of employees in the workplace.

Workplace Harassment Prevention Policy Requirements

The regulations require all employers in Nova Scotia to establish and implement a written workplace harassment prevention policy. This is in contract to obligations related to workplace violence, which only require some employers to have a policy preventing violence in the workplace.

Key components of workplace harassment prevention policies include but are not limited to:

• A commitment by the employer to ensure, as reasonably practicable, that no employee will be subjected to workplace harassment.
• A statement that employees are entitled to employment free of workplace harassment and that all employees have an obligation not to engage in workplace harassment.
• Clear procedures on:
  • how to recognize, prevent and respond to workplace harassment,
  • reporting incidents of harassment,
  • making a complaint,
  • investigating a complaint,
  • informing the complainant and subject of the complaint of the result of the investigation.
• A statement that the employer will not disclose any information related to a complaint of workplace harassment unless necessary.
• A statement that the employer will not reprimand or seek reprisal against an employee that makes a workplace harassment complaint in good faith.
• A commitment by the employer to take appropriate corrective action against those who engage in workplace harassment under the employer’s direction.
• A statement that the policy is not intended to discourage, prevent or preclude a complainant from exercising other legal rights.

The legislation also requires employers to provide training on their workplace harassment prevention policy and to commit to reviewing and updating their policy, if necessary, at least once every three years.

Key Takeaways

The regulations highlight a continued trend that emphasizes psychological safety in the workplace. Employers should review their current workplace harassment policies to ensure that their policy addresses both physical and psychological harassment, and to ensure that their policy is otherwise compliant with the new requirements outlined above. Employers should also provide their employees with training on the policy and the new requirements. For employers looking to revamp their workplace harassment policies, the Government of Nova Scotia has published a Guide for Employers on harassment in the workplace which includes a sample workplace harassment prevention policy and an investigation checklist.

If you have any questions about compliance with the new regulations and how to address harassment in your workplace, or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.

 

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance.