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| Inna Koldorf |
3. Workplace investigations
In Metrolinx v. Amalgamated Transit Union, Local 1587, 2025 ONCA 415, the Ontario Court of Appeal addressed employers’ statutory duties to investigate allegations of workplace harassment and employers’ right to discipline employees for off-duty conduct. The full facts, the original arbitrator’s decision and the Divisional Court’s decision on judicial review were included in last year’s top employment law cases of 2024 article. In short, five employees sent messages on a WhatsApp group chat on their personal phones about a number of female employees. Despite the absence of a formal complaint, the employer investigated the texts and subsequently terminated the employment of each of the five employees for cause. A grievance was filed. The arbitrator found that the grievors were terminated without just cause. On judicial review, the Divisional Court found that the arbitrator’s reasons were wrong in law. The union appealed the Divisional Court’s decision to the Ontario Court of Appeal.
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The Court of Appeal determined that the arbitrator erred in finding that an investigation could not be conducted in the absence of a complaint. The Occupational Health and Safety Act requires an employer to investigate allegations of harassment. The arbitrator relied on harmful myths, stereotypes and presumptions about sexual harassment, and failed to recognize that there are various reasons for a victim of harassment’s decision not to pursue an official complaint, none of which obliterate the harassing behaviour or the employer’s obligation to investigate.
4. Inducement
In a reminder that inducing an employee to leave stable employment may be costly, the employee in Miller v. Alaya Care Inc., 2025 ONSC 1028 was approached by a competitor of her then-employer and was persuaded to leave after 12 years of service. At the time, she was the most senior employee of her former employer. Seven months after starting employment with the competitor, she was terminated without cause. She brought a claim for wrongful dismissal, alleging that she had been induced and that the reasonable notice period should be increased as a result.
On a summary judgment motion, the Superior Court held that the employee was wrongfully dismissed and was entitled to a reasonable notice period of 14 months. The court determined that the competitor reached out to the employee, represented that the employee’s experience would assist in “growing” the competitor company, made inquiries about the employee’s compensation with her former employer so that she could be “lured” to leave her employment and was prepared to indemnify the employee in the event that her previous employer commenced litigation against her for joining the competitor. This conduct, the court concluded, was beyond normal expressions of interest. Coupled with the employee’s senior position as vice-president, the court determined that a 14-month reasonable notice period was appropriate in the circumstances.
5. Claw back clauses
On Dec. 23, 2025, the Superior Court released a decision addressing what is typically referred to as a claw back clause in a settlement agreement signed after termination of employment, providing some food for thought for employers as they head into 2026 and look to enter into settlement agreements with terminated employees. In Cross v. Cooling Tower Maintenance Inc., 2025 ONSC 7203, the plaintiff’s employment was terminated without cause after 26.5 years of service. The parties signed a settlement agreement that provided for a 24-month salary continuance with a clause requiring the employee to immediately advise the employer when he obtains new employment. In that case, the employee would be entitled to a lump sum payment equivalent to 50 per cent of the remaining amount owing to him under the settlement (claw back clause).
Within approximately four months of the signing of the settlement, the employee started a new job. He did not advise the employer as the settlement required. Instead, he continued to receive the salary continuance payments. Months later, the employer discovered that the employee had been working elsewhere while continuing to receive the salary continuance payments and stopped making payments. The employer considered the employee’s actions to be a repudiation of the settlement agreement and did not pay the 50 per cent lump sum as the claw back clause required. The employee filed a claim seeking payment of the lump sum, less the salary continuance paid after he began new employment. The employer counterclaimed for the payments that it had made above the employee’s ESA entitlements or, alternatively, for unjust enrichment, punitive damages and aggravated damages.
The Superior Court found that the employee intentionally failed to advise the employer of his new employment. While this was a material breach of the settlement, it was not a repudiation of the settlement since the employer was not deprived of substantially the whole benefit of the agreement. In fact, the employer remained protected from litigation under the terms of the agreement. In addition, the settlement did not clearly indicate that a lack of disclosure amounted to repudiation of the agreement; to evidence repudiation, there must be an intention by at least one party to no longer be bound by the contract. The court concluded that the employer breached the settlement agreement by failing to make the 50 per cent lump sum payment, less the amount of salary continuance that was paid to the employee after he began his new employment. The court also determined that the employee’s behaviour was not sufficiently malicious, oppressive or high-handed to justify an award of punitive damages.
This is the second half of a two-part series. Part one: Top Ontario employment law decisions of 2025.
Inna Koldorf is a partner in Miller Thomson LLP’s labour and employment law group, where she advises employers on labour, employment and human rights issues. She would like to thank Keona Lau, articling student, for her assistance in preparing this article.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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