An employee who leaves to work for a company’s competitor may be sued if their employer believes they’ve broken the written or unwritten terms of their employment contract. It is true that an employee’s obligations to their employer last beyond the last day of work, but that does not necessarily mean that you’ll get sued.
The ongoing written obligations of employees often relate to non-competition or non-solicitation clauses in contracts. These are essentially sections of the contract that are designed protect employers from having their departing employees take their customers or compete against them. Although many contracts include these types of clauses Ontario Courts won’t always enforce them if they are too strict.
An employee’s unwritten obligations are often more important than the written ones. At a minimum these unwritten rules require that a departing employee must return all property to their employer and keep anything that can’t be returned confidential. For a software company this means that beyond returning a company laptop you must ensure you don’t disclose trade secrets or customer lists to your new employer.
Returning all of your employer’s property and respecting their confidentiality is most important. If you’re worried about what’s written in your contract, a Lawyer should be able to review your contract and provide you with advice at a reasonable cost.
Frequently Asked Questions
I have a chronic medical condition which unfortunately has become worse over time. For the last two years I have been receiving benefits through my employer’s disability insurance plan. Recently, the insurer wrote to advise me that the terms of the policy have changed and that they now require additional medical information - why is this happening and am I at risk of losing my benefits?
Most disability insurance policies provided by employers have different coverage for different periods of time. For the first two years of an employee’s disability benefits are generally provided on the basis that you cannot perform the essential duties of your existing occupation. The definition of disability changes after two years in most policies.
One of the first steps in your case is to obtain a copy of the policy from your employer. This policy will usually include a brief description of the criteria that an employee must meet to be entitled to disability benefits. In the vast majority of cases after two years of paying benefits policies will limit an employee’s entitlement to further benefits unless the employee is unable to work in any occupation to which they are reasonably suited.
Because of this change to the disability definition, insurance companies will generally review files and seek additional medical information if someone has been receiving benefits for two years. However, Ontario courts have recognized that whether an individual is able to perform any occupation depends not only on their particular disability, but also their basic skill set and educational background. In many cases insurers won’t cut off benefits once they have completed their review and have received additional medical information. However, if you and your insurer disagree about whether you are capable of returning to the workforce it may be time to contact a Lawyer.
I was injured in a car accident while driving to drop off a package for my employer—I almost never drive as part of my job. I work in an office as a clerk. The other driver was charged. Now I am off work and need physiotherapy. My doctor says I may have a permanent injury to my back. I have received a Notice from the Workplace Safety Insurance Board (WSIB) requesting that I elect whether or not I want to receive benefits.
Can I sue the other driver and receive benefits?
No. In Ontario injured workers who receive WSIB benefits forego their right to sue on their own behalf. You may choose to elect not to receive benefits and preserve your right to sue a third party in some limited circumstances. In Ontario, employees who are insured under the Workplace Safety Insurance Act scheme are not permitted to sue their own employer for injuries sustained while working. Depending on the nature of your job, you may not be able to sue another worker or employer either.
However, if you are injured in a vehicle collision and the responsible driver is not a worker as defined in the Act then you may elect whether or not you wish to receive WSIB benefits or pursue the at fault driver. That is a complicated decision.
Generally speaking, the more serious the injuries you have sustained the more likely you will be better off foregoing WSIB benefits and pursuing the at fault driver. However, if there are questions about liability (if you are wholly or partially at fault), or if there is a question about your ability to successfully recover damages in a tort action the WSIB scheme may be the best option for you.
Deciding whether or not to elect to receive WSIB benefits is complicated, and best made with the assistance of a Lawyer with experience in such matters. Experienced Lawyers are available to consult with you, often without obligation to you.
I was just let go "without cause". What does this mean?
Prior to engaging in any litigious action, clients should have a grasp of not only their rights but those of the employer as well. What may not appear fair, maybe either contractually or legally legitimate. The term "without cause" is seen in most termination letters. There's a very clear reason for this.
The threshold for cause is high and, if the employer is unsuccessful in meeting that threshold, they then risk being subject to damages for wrongful termination inclusive of not only proper notice, but aggravated and punitive damages as well.
A prime example of this risk coming to fruition is seen in Ruston v. Keddco MFG. (2011) Ltd., 2019 ONCA 125. Ruston, former president of Keddco, was fired for cause. Keddco alleged that Ruston committed fraud. When Ruston indicated that he would be retaining legal counsel, Keddco advised him that, if he hired a Lawyer, it would counter-claim against him. They warned that the costs of litigation would be extreme to both parties.
Ruston ignored the threat and filed a claim against Keddco. Keddco followed-up on their promise and brought a counterclaim for $1.7 million. The lower court found that the allegations of fraud could not be proven. It was held that Ruston was wrongfully dismissed. He was awarded 19 months termination pay, in addition to $100,000 in punitive damages and $25,000 in moral damages. The costs award was $546,684. The total award, including payment in lieu of notice, was just below $1 million. The Ontario Court of Appeal dismissed the employer's appeal and withheld the lower courts ruling on these matters. Keddco's total losses would have far exceeded $1 million with their legal costs included.
Had Keddco simply terminated the employment without cause and relied on a properly drafted termination provision, Ruston's damages could have topped out at the Employment Standards Act entitlements. Without a contract, common law notice would have been subject to the soft cap of 24 months and early settlement would have been possible. Without the allegation of fraud and the subsequent counterclaim, Keddco's worst-case scenario would have likely been much better than the current end result.
This is an example of why employers are often advised to dismiss without cause, asserting the employer's right to do so and relying on properly drafted contract provisions to navigate the employees' entitlements upon termination.
So what does this mean for employees? Firstly, do not assume that your performance can no longer be factored into an award for termination pay. The employer can always argue "near cause" which has reduced awards in past decisions. Understand, however, that the most prevalent dispute in a without cause dismissal is the employee's entitlement, by contract and by law.
Employees who are terminated without cause, need to acknowledge that the employer has the right to do so. Nonetheless, they must do so while preserving your entitlements. Those entitlements should not be assessed by yourself or your employer. All aspects governing the employment relationship should be forwarded to a competent employment Lawyer. The employment Lawyer will indicate your entitlements and provide an honest opinion on the viability of disputing the package that was offered.
What does this mean for Employees and Employers?
Employees: Once terminated without cause, do not sign a full and final release without having a Lawyer review the employment relationship and confirm your actual entitlements.
Employers: Asserting cause is a risky position to take. Cost-benefit might weigh in favour of dismissing the employee "without cause." The allegation of cause cannot be retracted. Counsel should be sought prior to alleging cause.
Sources:
Ruston v. Keddco MFG. (2011) Ltd., 2019 ONCA 125 (CanLII)
Ruston v. Keddco Mfg. (2011) Ltd., 2018 ONSC 2919 (CanLII)
Need an Employment Lawyer? Reach out today. You may be eligible for a FREE no obligation consultation.