CHAPTER 13 Employment Law
Most employment standards legislation provides that where a purchaser that makes an asset acquisition of all or part of a business employs any of the former employees, their employment is deemed to be continuous for the purpose of the legislation (e.g., if the purchaser later terminates any of these employees, it must recognize their prior service with the seller in giving notice of termination). However, in Ontario, following the conclusion of an asset acquisition, the purchaser should enter into new contracts of employment with employees because their employment with the seller is deemed terminated by the sale. In Québec, the employees’ employment will automatically continue with the purchaser. Therefore, a sale of assets will not affect the continuity of the contract of employment of employees located in Québec. The Ontario Employment Standards Act, 2000 , also provides that related employers may be treated as a single employer for certain purposes under the law. This is meant to prevent employers from splitting their payroll in order, for example, to avoid paying severance pay. Severance pay, a legal requirement unique to Ontario, is payable to any employee with at least five years of service on termination of the employee without cause, if the employer has a payroll of $2.5 million or more, or if there is a “mass layoff” of 50 or more employees during a six-month period because all or part of the business has closed. Over the last several years, additional requirements for employer policies and employment contracts have been introduced in Ontario’s employment legislation. Although workplace harassment and violence, health and safety, and accessibility policies are already required for employers of various sizes, Ontario now requires employers also to have a policy outlining electronic monitoring of employees. In addition, employers with more than 25 employees are required to have a written policy in place for all employees with respect to disconnecting from work outside working hours (i.e., not having to engage in work-related communications).
As of October 25, 2021, Ontario’s minimum standards legislation bans the application of non-competition provisions in employment agreements for employees below the “C-suite,” except when employees sell their equity in the business and continue to be employed by the purchaser. Although this change in law does not affect agreements entered into prior to the ban, it will require employers to rethink how to protect their interests in their employment contracts and policies. Québec’s Act respecting labour standards generally does not apply to senior managerial personnel, which has been interpreted as referring only to a limited group of individuals who participate in the decision-making process regarding the policies and strategies of the organization. The Québec statute provides recourse for employees who are victims of specified prohibited practices, including psychological harassment. A remedy is also available to employees who have two or more years of service and who believe they were dismissed without cause. Employees who are successful in challenging the employer’s conduct may seek reinstatement to employment, in addition to being awarded any lost wages and other benefits.
Ontario’s minimum standards legislation bans the application of non-competition provisions in employment agreements for employees below the “C-suite.”
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