What does it mean if you are entitled to a discretionary bonus? Does this mean that you’re guaranteed a bonus, as the word entitled would suggest? Or are you subject to the discretionary whims of your employer?

Despite the enticing promise of entitlement, your receipt of a bonus and its amount is most likely at your boss’s discretion.

Bonus Packages & Bonus Entitlements

Bonuses can be an exciting windfall or an important part of your compensation package. Maybe this year was especially profitable and your boss wants to give you some extra cash around the holidays. Or maybe a 15% bonus was guaranteed on top of your salary as a contractual benefit. Whatever the case, bonusses and your entitlement to them will be set out in your employment contract.

Most often, bonuses are discretionary. Bonuses are commonly awarded as a token acknowledgement of an employee’s performance or to share the success of a company. There is generally no set formula or procedure for calculating a discretionary bonus. Their amount and frequency are up to your employer.

Other times, bonuses make up an important part of an employee’s compensation package as outlined in their employment contract. In such instances, bonuses can make up a significant part of an employee’s annual earnings. The parameters of these bonuses – how they are calculated and awarded – will be set out in the employment contract.

Bonuses in Contracts

Unfortunately, wording regarding bonuses in contracts is often vague and this can leave employees wondering if they can count on extra cash in addition to their salary.

It is important that bonus clauses are clear and consistent with the expectations of both parties. Being told that you can expect bonuses of 25% of your salary is no guarantee that you will unless this is clearly stated in your contract.

What Is A Discretionary Bonus?

Obviously, a discretionary bonus is to the advantage of the employer. A discretionary bonus allows employers to adjust according to their business’s financial situation. If the economy is rough, the employer can forgo distributing bonuses altogether and if the business is thriving, they can share that success with their employees. On the other hand, non-discretionary bonuses must be distributed as directed in the employment contract regardless of the company’s financial situation. As such, they can be an effective means of attracting top talent.

Bonus Packages & Entitlements Experts

Either way, bonus entitlements should be laid out clearly in the employment agreement. If brought before a judge, ambiguous wording regarding bonus entitlements will generally be ruled to the benefit of the employee.

If you have questions about your bonus entitlements or wish to incorporate a bonus program into your employees’ contracts, contact the professional employment law team at KCY at LAW: (905) 639-0999 or book your consultation online.

You were laid off? Oh no! That’s awful. I’m so sorry. You know what, they never appreciated you the way you deserve. What a lousy bunch of – temporarily? Ohhhh. Huh. So, you’re not fired? Ok. Refresh my memory on this whole temporary layoff thing!

What Is A Temporary Layoff?

Chances are, you’ve heard of temporary layoffs. Maybe you’ve wondered if this could happen to you and, if it did, what exactly that would mean.

A temporary layoff is the cutting back or complete cessation of an employee’s employment with the understanding that they will be called back to their full-time position within a specified period of time. A temporarily laid off individual is still considered an employee, even if they are not working. This can mean that they are not working at all, or even simply earning less than half of their regular wages.

Temporary Layoffs – A Solution for Hard Times

A temporary layoff is a way mitigate economic hardship for both employer and employees. Temporary layoffs are often brought on by things like economic downturn, shortages of work and seasonal employment.

Temporary layoffs are most common in union environments where collective bargaining agreements determine the parameters of a layoff such as which employees are the first to return to work.

A temporary layoff allows employers to avoid severance or termination costs as long as the employee is recalled to work within 13 weeks of the layoff’s commencement. Though it would certainly be appreciated by their employees, employers have no obligation to provide notice of a layoff. Additionally, employers are not required to give termination notice until the last day of the layoff should it become clear that the layoff will have to become permanent.

Contractual Agreements and Temporary Layoffs

The parameters of temporary layoffs are set out in the Employment Standards Act (ESA). However, the ESA doesn’t give employers the right to enact them. The right to temporarily layoff an employee must be contractually stated, either in the employment contract or the collective bargaining agreement.

If an employee is temporarily laid off without a provision for this in their contract, the layoff would be considered a constructive dismissal and the employee would be entitled to seek damages for wrongful dismissal.

Wrongful dismissal charges may be avoided if the laid off employee is immediately recalled to their former position. Furthermore, some courts have found that employees who refuse to return to their position after a non-contractual layoff will be found to have failed in their duty to mitigate their damages.

If the power to perform temporary layoffs was not in written agreement at the time of hire and an employer wishes to pursue this option, they should approach their employee with a written proposal for a temporary layoff. It is possible that the employee will choose this over termination, especially since employees can usually collect Employment Insurance benefits during a layoff.

How Long Can Temporary Layoffs Last?

A temporary layoff can last up to 13 weeks in a consecutive 20-week period. However, if a layoff exceeds this 13-week period it will become a termination at which point the employee will be entitled to termination pay in lieu of notice with the first day of the layoff becoming the date of termination.

However, the ESA provides that a temporary layoff may be extended to as long as 35 weeks if:

• The employee continues to receive substantial payments from the employer,
• the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,
• the employee receives supplementary unemployment benefits,
• the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,
• the employer recalls the employee within the time approved by the Director, or
• in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or

If an employee quits before a layoff is over they are not owed severance or termination packages but may still be entitled to accrued benefits such as vacation pay.

Temporary Layoff Legal Experts

Employers should always seek legal counsel before temporarily laying off an employee. To speak with an experienced employment lawyer about temporary layoffs or any other employment law matter, call KCY at LAW at (905) 639-0999 or contact us online here.

Working long hours? We get you. Having recently finished up a trial that had us at the office in the wee-est of hours, we can commiserate over the exhaustion that arises from fitting two weeks’ worth of work into one. Deadlines must be met but workers must also be fairly compensated for their lost free and family time.

When Does Overtime Start?

Overtime starts for most employees after working 44 hours in a work week (regardless if their employment status is full- or part-time, or casual). After 44 hours of work in a week, they must receive at least time and a half for each extra hour they work (1.5 times their normal wages). Unless explicitly agreed to in the employment contract, overtime is not calculated daily. This means that an employee could work 11 hours in one day and not receive time and a half after their initial eight hours on the job so long as over the course of the week they do not exceed 44 hours of work.

Exceptions To Overtime Standards

There are, however, several exceptions to overtime standards. Managers and supervisors, for example, are not covered by overtime rules. While calling more members of your staff by these titles to avoid paying them overtime may seem like a sneaky way to save your business money, simply calling an employee a manager or supervisor does not make it so. Only people with the authority to hire, fire and grant time off to employees, and who participate in business and operations-level decision making are considered managers when it comes to overtime entitlements.

Overtime and Public Holidays

When it comes to overtime pay and public holidays there are three possibilities:

• The employee has the day off and receives public holiday pay.
• The employee works and gets premium pay (1.5 times regular pay) plus public holiday pay. This results in the employee earning 2.5 times their regular wages, also referred to as double time and a half.
• The employee works the holiday, earns regular wages and receives an alternate day off with public holiday pay.

How to Calculate Overtime Pay

There is some variation in how overtime pay is calculated depending on how the employee is paid (hourly, commission, salaried, etc.). However, the basic principle that the employee’s average hourly wage is multiplied by 1.5 for every hour they work after 44 hours in a week remains consistent. Below are some examples of what that can look like.

Hourly Wage
Daphne’s regular hourly wage is $16. She worked 48 hours this week meaning she worked 4 hours overtime. Therefore, Daphne is entitled to an additional $96 to her regular weeks’ wages of $704 (44 hours x $16 = $704) for a total earning of $800.

48 hours – 44 hours = 4 hours overtime
1.5 (time and a half) x $16 (hourly wage) = $24 overtime wage
$24 (overtime hourly wage) x 4 (hours overtime) = $96 overtime pay

Hourly Wage plus Commission
For an employee working an hourly rate plus commission, their overtime rate is calculated by taking their total week’s earnings (including commissions) and dividing it by the regular number of hours (44) to establish what would be their hourly wage and therefore the wage that will be used to calculate overtime pay.

So, if Frieda worked 50 hours last week and earned $400 commission in addition to her $12 per hour wage she would be entitled to $180 in overtime pay in addition to her $1000 wages (50 hours x $12 = $600 + $400 = $1000) for a total earning of $1180.

50 hours – 44 hours = 6 hours overtime
$1000 (weekly earnings) ÷ 50 hours = $20 per hour (average hourly wage)
1.5 (time and a half) x $20 (hourly wage) = $30 overtime wage
$30 (overtime hourly wage) x 6 (hours overtime) = $180 overtime pay

Fixed Salary
Similarly, for an employee with a fixed salary you must divide their weekly salary by 44 (hours) to get the hourly rate you will use to calculate their overtime pay.

Harriet is paid a weekly salary of $1,500. She worked 46 hours last week and is therefore entitled to $102.27 overtime pay in addition to her regular pay of $1,500 for a total earning of $1,602.27.

46 hours – 44 hours = 2 hours overtime
$1,500 (weekly salary) ÷ 44 hours = $34.09 per hour (average hourly wage)
1.5 (time and a half) x $34.09 (hourly wage) = $51.14 overtime wage
$51.14 (overtime wage) x 2 (hours overtime) = $102.27 overtime pay

Time Off Instead of Overtime Pay

It is possible as an employee to receive time off instead of overtime pay. This is often referred to as ‘banked time’ and must be agreed to in writing by both employer and employee. The employee must receive at least 1.5 hours paid time off for each hour of overtime worked within three months of the week in which the overtime occurred or within a year if the employee is agreeable in writing.

Overtime Averaging Agreements

You may be reading this post and thinking to yourself: “but I regularly work over 44 hours in a week and have never received overtime pay. Is this even legal?” The answer ‘yes’ is not impossible. Overtime Averaging Agreements are a period of time agreed to by both the employer and employee over which the number of hours worked will be averaged. This means that instead of overtime starting after 44 hours in a week, it will start when the total number of hours for the averaging period are exceeded. For example:

If the averaging period is three weeks, overtime hours will start to collect after the employee has worked 132 hours (44 hours x 3 weeks = 132 hours) in this period. This means that if an employee with this averaging agreement works 60 hours one week, 50 the next but only 20 the last week of the averaging period, they do not qualify for over hours because the total number of hours they will have worked is only 130 and does not exceed the 132 hour threshold for a three-week averaging period.

Overtime Entitlement Experts

To discuss your overtime entitlements with an experienced employment lawyer, contact KCY at LAW by calling us on (905) 639-0999 or reach us online for more info!

Normally, employers must give notice, or pay in lieu thereof, when they terminate an employee. This is because, more often than not, employees are terminated without cause. A company could be downsizing or office personalities are clashing and an employee needs to be let go to strike a balance in the workplace.

Even if they mess up on the job, many employees are given termination notice because of the difficulty in proving that a termination was brought on by the employee’s behaviour or performance.

If an employer finds just cause to terminate an employee, the employee will not be entitled to notice of dismissal, termination or severance pay. Additionally, employees who are terminated for cause may not be eligible to collect Employment Insurance (EI) benefits and will likely find it more difficult to find new employment than if they had been terminated without cause.

What Is Considered Just Cause For Dismissal?

According to the Ontario Court of Appeal in R. v. Arthurs, Ex parte Port Arthur Shipbuilding Co. (1967):

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.

Let’s break that down. Just cause for dismissal arises when an employee is guilty of wilful and significant misconduct, neglect of duty or disobedience. It requires that an employee go against their contractual obligations to their employer or behave in a way that is damaging to the employer’s business.

Justifying Just Cause Dismissal

It is not enough for an employee to mess up on the job. Accidental poor work behaviour is not the same as wilful or deliberate misconduct. The employee’s actions or omissions must demonstrate deliberate disregard or even open hostility to the employment terms set out in their employment contract to justify dismissal.

When courts are deciding if termination for cause is justified, they always look for context. They will examine the extent, nature and circumstances of the alleged misconduct to determine if the punishment fits the crime. Factors considered include the employee’s position in the company (i.e. his or her seniority and responsibilities) and the employer’s workplace policies, procedures and standards. It is essential that employers hold all employees to the same standard. Occasionally condoning an act makes it much more difficult to later fire an employee for conducting it.

It is up to the employer to prove that a termination was for cause. Doing so is often complicated. First, an employer will have to prove that fireable behaviour occurred. To do this, employers should be careful to document misbehaviour and the disciplinary measures used in response. The employer must further prove that the employee’s actions – or lack thereof – were in contravention to their employment contract. They must prove that the employee behaved in such a way that it damaged the employment relationship beyond repair. If an employer cannot demonstrate they had cause to terminate, they will be ordered by the court to pay damages to their former employee.

Behaviour That May Warrant Just Cause For Dismissal

• Dishonesty (i.e. theft or fraud)
• Violence or harassment in the workplace
• Wilful misconduct
• Habitual neglect of duty
• Conflict of interest
• Off-duty behaviour that negatively impacts an employer’s business interests (see our blog about social media defamation for more on this)

Disobedience or insubordination can also be cause for termination. Insubordination may involve derisive, abusive, contemptuous behaviour towards a superior. Disobedience is the deliberate refusal to follow reasonable and important orders that are within the scope of an employee’s contractual duties. Usually, employers must have at least a few documented incidences to justify terminating an employee for disobedience or insubordination.

Incompetence and Negligence

What if your employee is just plain terrible at their job? Can you fire them for being incompetent or negligent? The answer is ‘yes’ but this can be tricky.

When it comes to firing an employee for their incompetence or negligence, the employer must make the employee aware of their misconduct; let them know the standards they must meet; give them the opportunity to improve; and inform them of the consequences if they do not.

Progressive Discipline and Performance Improvement Plans (PIPs)

Occasionally, an employee can be terminated for cause based on a single significant incident. More often, however, termination for cause arises from a series of repeated failings. In the case of the latter, it is essential that employers be able to demonstrate that they gave an employee incrementally more serious disciplines and sought ways to improve their performance. For both of these examples, documentation with concrete examples is key.

Progressive discipline most often means initially giving an employee a verbal warning, then a written one, followed by a suspension and finally termination in response to repeated inadequacies in their performance. A Performance Improvement Plan (PIP) is intended to ensure that the employee is aware of their job’s expectations, their failure to meet them, and gives them explicit, achievable goals with a clear timeline for them to improve their performance.

Employer Rights and Responsibilities When Firing An Employee

If you are considering firing an employee without pay or notice, the experienced employment law team at KCY at LAW is ready to consult with you on your rights and responsibilities and advise you of the fair and appropriate course of action. Call us now on (905) 639-0999 or contact us online for more info!

Last week we discussed four leaves of absence intended to help employees cope with various personal and familial emergencies. This week we will try and end this series on a brighter note as we go over six more types of job-protected leaves of absence this week.

Job-Protected Leaves of Absence

As well as the leaves of absence highlighted last week, and the general guidelines about leaves of absence in Ontario outlined the week prior it’s now time to look at 6 more job related leaves of absence.

Reservist Leave

This leave is for military reservists deployed to a domestic or international operation to deal with an emergency or its aftermath. It lasts for the duration of the reservist’s operations. The reservists must, however, have been with their employer for at least six consecutive months prior to their deployment to qualify for this leave.

Organ Donor Leave

This is for employees having surgery to donate an organ (kidney, liver, lung, pancreas, small bowel). This leave begins the day of surgery unless otherwise specified in a certificate issued by a medical practitioner. The leave can last up to 13 weeks with the possibility of up to an additional 13 weeks if the employee is not yet able to do their job because of the surgery.

Jury Duty Leave

Employees are generally entitled to take time off for jury duty. The length of the leave depends on the length of the trial. However, if an employee’s absence – prolonged or otherwise – would cause undue hardship to an employer’s business, the employer may make a written application to have their employee’s jury duty postponed.

Voting Leave

Anyone qualified to vote in a municipal, provincial or federal election is entitled to three consecutive hours off while the polls are open. It is the employer’s right to grant this time off at their convenience. However, since many polls are open late, providing employees with this leave may not always be necessary.

Pregnancy and Parental Leaves

Easily the happiest of the leaves available, we gave a comprehensive overview of pregnancy and parental leave here. However, as a refresher: Pregnancy leave is for pregnant women whereas parental leave is for any parent of a newborn. You are entitled to pregnancy leave as long as you began your current employment at least 13 weeks before your expected due date. This leave lasts up to 17 weeks and can start up to 17 weeks prior to your expected due date.

Parental leave is for new parents of all stripes (birth, adopting, or someone in a relationship with the parent of a newborn intending to treat said child as their own). It is 37 weeks (35 for women who also took a 17-week pregnancy leave) and is unpaid.

Leave of Absence Specialists

If your work position has been negatively impacted by a leave of absence, KCY at LAW has the expertise to ensure that your rights are protected. Call us on (905) 639-0999 to book a consultation or contact us online now!

As the summer looms ever nearer and all of Canada’s National Parks are on offer for free to mark our country’s 150^th anniversary, you are probably hoping to cash in some of those vacation days to maximize your time away from the over- or under-air-conditioned office.

When it comes to vacations, Canadians can’t get enough. And we don’t. In fact, we rank pretty low in the developed world for paid vacation days. We’ll save you the trauma of knowing how much paid downtime those Scandinavians get and instead give you an overview of your entitlements under Ontario Labour Law to make sure you can take advantage of them in full during the warm weather months ahead.

Vacation Time

Ontario employees are entitled to two weeks’ vacation time after each 12-month vacation entitlement year. Your vacation entitlement year normally begins the day you are hired. This means that after 12 consecutive months of employment with the same company you are entitled to two weeks of vacation. The vacation entitlement year is not affected by approved leaves of absence or sick days. This means, for example, that if your entitlement year began in May, 2016 and you took three months parental leave from July to September, you are still entitled to take two weeks off as of May, 2017.

Unfortunately, the Employment Standards Act doesn’t provide for increases to the vacation time entitlement based on length of employment. This means that, in Ontario, even after working for the same employer for five, ten, or even 25 years, you are still only entitled to two weeks vacation time. However, many contracts and collective agreements do provide for increases to vacation time as the length of your employment increases.

Calculating Vacation Time

The number of vacation days to which you are entitled depends on whether your employment is full- or part-time. Generally speaking, you are entitled to take off the number of days you work in a regular work week, times two.

Therefore, if you work five days a week you get ten vacation days (two work weeks). If you work three days per week you get six vacation days. If you have an irregular schedule with varying numbers of days worked in a week throughout the year, you can calculate your vacation days by taking the number of days you worked in the last entitlement year period and dividing it by 52 (the number of weeks in the year) to get the average number of days you worked per week and then multiplying that number by two. For example, if you worked 136 days last year you would be entitled to 5.2 vacation days (136 days ÷ 52 weeks x 2 = 5.2 days).

Scheduling Vacation Time

Vacation time must be taken within ten months of the completion of the entitlement year. Employers have the right to schedule vacation and are obligated to ensure it is taken before the end of the ten-month period following the completion of an employee’s entitlement year period.

If an employee is on leave at the time of this deadline, the vacation time must be taken when the leave ends or at a later date agreed upon in writing by the employer and employee.

Additionally, vacation time must be scheduled in one or two week blocks unless the employer and employee give written agreement to an alternate arrangement. This means that extending long weekends with an extra vacation day here and there is at the discretion of employers and not guaranteed for employees wishing to make a four-day cottage trip out of the upcoming Victoria Day Weekend.

How To Calculate Vacation Pay

Vacation pay also begins accruing the day you are hired. It must be at least 4% of your gross wages for your entitlement year. Whereas with vacation time, you must complete your full vacation entitlement year to receive any vacation time, you earn vacation pay while you earn wages. So, if you work 3 months, you will be entitled to a minimum of 4% of those months’ wages as vacation pay. Accordingly, if you earned $30,000 in gross wages in your vacation entitlement year, you are entitled to $1,200 ($30,000 x 0.04) as vacation pay.

Gross wages include your: normal earnings, commissions, non-discretionary bonuses, overtime, public holiday pay and termination pay. On the other hand, earnings from tips, gratuities, discretionary bonuses (Christmas or others unrelated to performance), travel expenses and allowances, benefit plan contributions, federal EI benefits, and severance pay are not included in your gross wages when calculating vacation pay.

Vacation pay is generally paid in a lump sum before an employee takes their earned vacation time. If you quit or are dismissed, you are entitled to be paid the vacation pay that you have earned but not yet been paid out.

Vacation Time or Pay Compensation

If you have been denied vacation time or pay, KCY at LAW are experienced employment law lawyers who can help get you compensation for those lost beach hours. Fill out our contact form or call us to book your consultation (905) 639-0999.