2024 Employment Law in Review, Part 2: The Eras Tour (Rudner Law Version)

Consider This

Valid contracts require consideration, meaning that something of value must be exchanged. For new employees this is usually the job; for existing employees, this becomes more complicated. Though it’s understood that fresh consideration is required, the question often hanging overhead is: what is adequate consideration?

Peppercorns and Peartrees

In Giacomodonato v. PearTree Securities Inc. (“PearTree”), the Ontario Court of Appeal addressed the above question, confirming that while current employees need fresh consideration for new contracts, courts typically assess only its existence – not its adequacy.

PearTree concerned a dismissed employee who signed a second contract with less generous terms, including its termination clause, after initially signing the first contract while employed elsewhere. He informed the Employer that leaving his job would be costly, so he received $40,000 around the time he signed the second contract. The payment wasn’t referenced in the contract, but it granted him extra vacation time.

After his dismissal years later, he argued the first contract should apply, claiming the second lacked consideration. The Court of Appeal disagreed, finding that the additional vacation time was consideration for the second contract, making it enforceable, and stating that it was not courts’ job to assess the pros and cons of a deal.

While this appears to suggest that employers can simply offer a “peppercorn” (the example often used in law school), in affirming the trial judge’s decision, the Court noted the importance of the employment context: the power imbalance and financial dependence make employees vulnerable.  

In our opinion, given our courts’ efforts to protect employees from harsh termination clauses, we expect that courts will find a way to help employees where there is an inherently unfair bargain. As such, employers should offer consideration that justifies the terms of the new contract.

We discussed PearTree in detail on our blog. 

Mitigation

As the saying goes: severance from reasonable notice is not a windfall, it is a bridge to your next job. Thus, employees claiming reasonable notice at common law have a duty to mitigate by making reasonable efforts to look for comparable work. It can also mean that failing to accept a similar job with the same employer is a failure to mitigate, which can substantially reduce entitlements. As a result, it’s important to be able to demonstrate one’s mitigation efforts.

Testing Claims: Inability to Mitigate and Medical Evidence

In Marshall v. Mercantile Exchange Corporation, the Employee, dismissed after 25 years, sued for 26 months’ notice and claimed that mental distress prevented him from mitigating, possibly for the entire period.

The Employer sought an independent medical exam (“IME”) to assess this claim. The Court granted the IME, noting his claimed inability to mitigate exceeded the maximum period (12 months) in the precedents he relied on. The Court aimed to balance the Employer’s right to challenge the claim against the potential abuse of that right.

Interestingly, this decision provides a counterpoint to a decision we covered in Part 1, where the Court of Appeal allowed a mental distress claim while expressly noting that medical evidence was not required. The ordering of a medical examination in this case was warranted because the Employee claimed an inability to mitigate for an exceptionally long notice period. As such, this decision will not open the doors to medical examinations; we expect such orders to remain exceptional. We discussed this decision in detail on our blog.

Failure to Mitigate: We Are Never Ever Getting Back Together

Dismissals are like breakups, except that in the employment law context, sometimes employees have to get back together with their ex-employers in order to mitigate. This was the situation in Brown v. General Electric Canada et al., where the Employee’s employment was terminated following an asset sale of the Employer. Shortly before closing, the purchaser offered the Employee essentially the same job; he declined. The sale closed and he sued for wrongful dismissal.

The Court of King’s Bench of Manitoba found that he acted unreasonably by rejecting the offer and as such failed to mitigate. Notably, the Court clarified that mitigation requires one to take steps that a reasonable person would take, so it was immaterial that the Employee rejected the offer prior to the closing of the sale, which was when his employment terminated. A reasonable person would have accepted the purchaser’s offer for what was basically the same job. We discussed this decision in detail on our blog.

Just Cause

The Rudner Law Eras Tour would not be the same without discussing Stuart’s favourite topic: just cause. Often referred to as the capital punishment of employment law, just cause is hard to prove and can have significant consequences for employers who wrongfully assert it.  

Notably, just cause must be asserted at the time of dismissal; the exception is when an employer asserts after-acquired cause (“AAC”). Generally, AAC can be asserted in claims after an employer uncovers information that would have led them to assert cause at the time of dismissal. The decisions discussed below deal with AAC.

Emails I Can’t Send

In the Ontario Superior Court of Justice decision, Ratz-Cheung v. BMO Nesbitt Burns Inc., an employee with 24 years of service sued for notice after being dismissed without cause. During examinations for discovery, the Employer found out that she downloaded over 4000 work emails containing sensitive information and saved them in a USB drive that she kept at home. She saved the emails because of a workplace dispute; they were insurance in case she needed to protect herself.

The Employer subsequently amended its Statement of Defence to assert AAC. The Court found that there was no just cause, despite intentionally breaching policies and putting sensitive information at risk, because it was a one-time lapse in judgment in an otherwise unblemished record. Mitigating factors also included the fact that the Employee was going through a tough time in her personal life, and that she saved the emails because she thought she was being treated unfairly at work. Consequently, the Employee was awarded a 24 month notice period, or $240,091.00.

This decision highlights that Courts will engage in a contextual analysis whenever just cause is asserted.

High Infidelity

As Stuart often says, “just cause is not a lost cause.” The Superior Court of Justice upheld the Employer’s allegations of cause in Mittra v. Royal Bank of Canada et al., a case concerning a senior banker’s breaches of his fiduciary duties.  

The Employee was dismissed without cause after 14 years of service, following an investigation into his conduct regarding a colleague who had gotten in trouble for unethical financial dealings. He sued, and during discovery, the Employer realized that he had deliberately misled investigators and lied about his own dealings, leading to an assertion of AAC.

The Court agreed with the Employer, finding that the Employee breached his fiduciary obligations, particularly his duty of honesty, as a senior banker in a position of trust, as well as violating ethical rules and policies. His actions broke the relationship beyond repair, which is a necessary finding in cases of just cause.

We did not cover the above decisions on our blog; however, they are discussed in Stuart’s book on just cause: You’re Fired! Just Cause for Dismissal in Canada.

Artificial Intelligence (“AI”) in the Workplace

AI went mainstream in 2024, with businesses widely adopting generative AI to streamline hiring processes. Its use in the workplace is rapidly growing, but employers mistake its lack of regulation to a lack of liability, which is a huge gamble. The biggest point of exposure comes from AIs making discriminatory hiring decisions.

Glitch

Although Moffatt v. Air Canada is not an employment law case, it suggests employers can be liable for their AI’s actions. In this case, Air Canada’s chatbot misinformed a customer about bereavement fares, leading him to rely on incorrect information and be denied reimbursement. The British Columbia Civil Resolution Tribunal held Air Canada responsible and ordered repayment.

This principle could easily apply in employment. If an AI discriminates against a candidate, the employer could face legal action. Bias in AI can stem from flawed data or learned discriminatory behavior—an issue which Amazon encountered when it had to take its hiring AI offline due to sexism. Employers must ensure their AI systems are free from bias to avoid similar liability risks.

Barren Landscape

One of the few regulations concerning AI, Ontario’s Bill 149 will require employers to disclose the use of AI in hiring in their public job postings. While we expect the AI regulatory framework to develop quickly, there is not much else in the books other than the above decision and this bill. Going into 2025, employers and employees should be aware that the lack of guidance presents various points of risk. It is indispensable to consult with HR counsel regarding AI-related issues.

Planning Ahead

Since employers are particularly exposed, it is advisable to be proactive and to plan ahead. A lack of regulation does not mean employers can do as they please. We recommend working with counsel to implement AI-related policies and procedures, particularly with regards to human oversight with the goal of ensuring that AIs are not making unlawful decisions.

Honourable Mention (Surprise Track)

We close out our review of 2024’s biggest cases with an honourable mention that closed the loop on a pandemic era hot topic: vaccine requirements.

Frustration and Vaccine Policies

In Croke v. VuPoint System Ltd., the Employee was terminated for refusing to get vaccinated. The Employer was a contractor who did virtually all its business with Bell, which mandated vaccine requirements for its contractors. The Employer implemented the policy and the Employee refused to comply.  

The Court of Appeal for Ontario upheld the trial court’s finding that the contract was frustrated. Since the policy was out of the Employer’s control, and it did almost all its business with Bell, the Employee was unable to perform his duties after not getting vaccinated. Consequently, there was no wrongful dismissal.

The Supreme Court of Canada denied leave to appeal this decision. We covered both trial and appellate decisions on our blog.

Legislative Updates

We close out our Eras Tour with a summary of 2024’s key legislative updates, broken down by jurisdiction.

Ontario

The Working for Workers Four, Working for Workers Five and Working for Workers Six Acts both passed in 2024, with several amendments to the Employment Standards Act, 2000 (the “ESA”) and the Occupational Health and Safety Act, 1990 (the “OHSA”). We cover important changes below.

ESA Changes Already In Force

• The definition of employee now extends to workers in trial periods
• Employers are prohibited from requiring medical notes for employee’s ESA sick days
• Employers cannot deduct from wages because of customers leaving without paying (e.g.: dine and dash)
• Maximum fine for violated the ESA increased to $100,000.00

Job Posting Requirements

• Starting on January 1, 2026, employers must disclose the use of AI in the hiring process in their publicly advertised job postings
• Employers must include the expected pay range for the advertised job
• Employers will be prohibited from requiring “Canadian” experience
• The posting must specify if the position is for an existing vacancy
• Employers must advise candidates who were interviewed regarding the hiring decision made
• Copies and records of postings must be retained for three years

We detail the above requirements on our blog.

Information to Provide to Employees

• As of July 1, 2025, the ESA’s regulations provide that employees must be provided with certain information before their first day of work, or as soon as possible thereafter
• Requirements include: the legal name of the employer, and its operating name if different to the legal name;
• The contact information of the employer;
• A general description of where the employee will perform work;
• The employee’s starting compensation and pay period information; and
• A job description included anticipated hours of work.
• OHSA Changes Already in Force
• OHSA now applies to remote work (telework)
• The definitions of harassment and sexual harassment now include harassment done via digital means
• Policy postings: OHSA posting requirements can now be satisfied by making the material easily accessible online rather than physically in the workplace

OHSA Washroom Regulations

• As of July 1, 2025: washroom facilities made available to workers must be kept in sanitary condition.
• Further, employers are required to keep, maintain and make available records of the cleaning of washroom facilities.
• As of January 1, 2026: record keeping requirements with respect to the two most recent cleanings of washroom facilities. These records may be posted physically in a visible location or digitally if made easily accessible.
• Constructors must maintain records of the sanitizing of any toilet, urinal and clean-up facilities.
• Effective January 1, 2026: records must also include the date of services for the past six months or the duration of the construction project, whichever is shorter.

We detail the above requirements on our blog.

Digital Platform Workers’ Rights Act (the “DPWRA”)

• Coming into force on July 1, 2025
• Provides workers on digital platforms (e.g.: Uber) with minimum rights
• Key rights include: same minimum wage as employees;
• Protections against reprisal; and
• Prohibitions against certain pay deductions
• Rights under the DPWRA also apply to contractors

We covered the DPWRA in detail in this article.

Federal Jurisdiction

Changes to the Canada Labour Code (the “CLC”)

• The following changes are already in force:
• Federally-regulated employees are entitled to notice of dismissal based on their years of service, similar to Ontario’s ESA (e.g.: 3 weeks for 3 years of service)
• Employers must provide dismissed employees with a statement of their pay and benefits, along with other key job information
• Workers are presumed to be employees under the CLC unless proven otherwise, misclassification of workers expressly prohibited
• Coming into force on a date to be announced: federally-regulated employers will have to have a disconnecting from work policy, but it will not create a positive right to disconnect (similar to Ontario’s policy).

Alberta

In January 2024, Alberta introduced changes designed to streamline the trial process. Although this only replaces prior summary trial procedures, it signals a desire to address the costly and lengthy nature of litigation.

The key changes are that parties will not need to argue about the suitability of the streamlined process, the court will make that decision. Additionally, the test for the streamlined process is now whether the process is necessary for a just resolution. Employee and employer litigants in Alberta may benefit from this new streamlined process.

British Columbia

Like Ontario, British Columbia passed a law addressing digital platform work, which came into force on September 3, 2024. The Online Platform Workers Act addresses many of the same issues that Ontario’s DPWRA addresses, granting gig workers in BC with minimum wage rights and other minimum employment standards. The key difference is that the BC law deems digital platform workers employees, while Ontario’s law does not.

We expect other jurisdictions to address digital platforms and gig workers via similar legislation.

No Carrot, All Stick

Thank you for reading our 2024 Year in Review. As our discussion shows, we are in an HR Law Era where our courts remain concerned with the power imbalance in the employment relationship and will find ways to help employees.

While we expect this trend to continue, it’s not all doom and gloom for employers. We saw that courts will not accept claims of inability to mitigate for lengthy periods without supporting evidence, and we also saw that courts will not rewrite the terms of a settlement where they are clearly drafted. As courts incentivize employers to draft properly and behave well, with the threat of hefty damages, they have also provided clear guidelines on how to avoid becoming a precedent with a lofty legal bill.

Hence, regular readers will not be surprised to hear us say that the best thing an employer can do is to be proactive: get advice before acting, and work with HR counsel to implement strong contracts and policies.

As we look to the year ahead, we expect developments to occur at a rapid pace in the realms of AI and digital platform work. As the pendulum swings and eras change, we recommend that you consult with HR counsel whether you are an employer or an employee. The law can evolve quickly, and your rights and obligations can change with little warning. Our focus is on providing employers and employees with practical and strategic advice to navigate all challenges ahead.