Legal Resource Guide

2012

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set out in the act apply with respect to an employee and his or her employer if a) the employee's work is to be performed in Ontario; or b) the employee's work is to be performed in Ontario and outside Ontario but the work performed outside Ontario is a continuation of work per- formed in Ontario." "Let's say an employee begins with a company in the United States and has worked for it for four years and now is transferred to the Canadian division," says Dvorkin. "To the employee, it seems he's working for the same company. So he's transferred over, and two years later his employment is terminated. According to this act, in terms of determining termination entitlement, the employer only has to count the two years that the employee worked in Ontario." Dvorkin says a "smart employer will often have employees sign contracts which limit their entitlement upon termination to whatever is provided in the ESA because they don't want to open themselves up to having to pay common- law notice." If the ESA reference is included in the con- tract, "it's very clear the work that you did out- side of the province certainly can't be considered a continuation of work that was performed in Ontario because you did it before you came here. In that situation the employer is only going to have to take into account the years of service of work in Ontario. "For people who are being transferred who out to be such a slap in the face when he realizes that instead of getting his length of service of six years, he's really only looking at two." And there's generally no recourse. "Once an employee signs a valid employment contract with a clause limiting entitlement upon termination to the minimum standards of the ESA, it's too late. There's not a thing you can do about that," says Dvorkin. But there is hope for some employees. "Those who "ONCE AN EMPLOYEE SIGNS A VALID EMPLOYMENT CONTRACT WITH A CLAUSE LIMITING ENTITLEMENT UPON TERMINATION TO THE MINIMUM STANDARDS OF THE ESA, IT'S TOO LATE." haven't considered this, it could be a huge difference because you may have worked for a decade or longer with the same company, you get transferred, you're taking a promotion, and all of a sudden the employer wants to terminate the employment," says Dvorkin. "Now you are stuck; it could be as little as one week of notice or pay in lieu of notice because if they terminate your employment in the first year that's what you get." Even worse, under the ESA you only get severance pay if you've worked more than five years in Ontario. Notice under the ESA is "very clear, the provisions are one week for each year of service," says Dvorkin. "So if you've been there for a year you get one week of notice or pay in lieu of notice and that's up to eight weeks. Once you're at eight years, any- thing over that you're still limited to eight weeks of notice. Severance is on top of that, and the minimum you have to have worked for the employer in Ontario is five years or more." Whether employers realize in advance the significance of the clause prior to a termination, they certainly get informed by competent legal counsel when faced with a lawsuit — and take advantage of it, says Dvorkin. "For whatever reason they've decided to terminate the employment, but now it becomes so much cheaper for them. And if the employee isn't aware of this, he can get really stuck because he's made a move, and he thought this was an opportunity, and it turns haven't signed employment contracts, which limit them to ESA minimums on termination, may not have this conse- quence because then they can sue under common law and the common-law principles of termi- nation of employment will apply. They don't have to be concerned that they're going to be limited to the ESA." Dvorkin says the best way to prevent this from happening is go to an Ontario employment lawyer before signing an employment contract. The lawyer will try to ensure any agreement includes a clause that says the company will acknowledge the entire length of service of the employee whether or not that service was in Ontario. "What looks like a great deal might not be such a great deal when they fire you a year later and all those years you worked for the company go out the window in terms of your termination entitlement," says Dvorkin. He says the goal is to make the company agree "that upon the termination of your employment they're going to acknowledge all the time you've worked for the company, wherever it may have been, and they're going to consider it the same as time worked in Ontario." What if they say no to including such a clause or excluding the ESA clause? "Then you have a decision to make. It's a risk-benefit analysis. If you believe that you have a fantastic relationship with the employer and that the risk of your employment being terminated relatively quickly in Ontario once you get there is small, you might be willing to take the risk, especially if you're going for a good promotion. "But at the very least you should be aware because if you're not, then you can't make an informed decision and you can't balance the risk of the move versus the benefit of the move. On the other hand, if you have no other options then it may be a moot point and you take what you can get in a tough economic environment. But at least if you got advice from a lawyer you're prepared for that possibility." Meanwhile, he notes the best-case scenario is if the employer doesn't present a contract since, in that case, s. 3 can't be applied. 9

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