A beach goer leaves footprints in the sand on the beach as the sun goes down over the Spanish costal city of Marbella on September 1, 2009. Photo by SASCHA SCHUERMANN/AFP/Getty Images

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By Howard Levitt and Peter Carey

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Heraclitus of Ephesus (c. 535 to c. 475 B.C.) is known for the doctrine that essentially states “the only constant in life is change.”

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He must have been an employment lawyer in Ancient Greece.

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We are frequently asked by both employers and employees why, with an army of lawyers working on employment law issues, we can’t give more concrete advice (i.e. advice without qualifications). We are asked, haven’t you figured this out already?

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Here’s the problem: employment law changes. It changes frequently, and the changes can be substantive. A large part of what we do is simply keeping abreast of new developments in the law that will affect our clients. These can occur right in the middle of a case and radically change its outcome.

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A wise old lawyer once said that litigating is like standing on shifting sand and that a smart litigator constantly re-examines the premises upon which they build their case.

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It has happened again! This past summer, the Ontario Court of Appeal released two decisions that clarified several issues in employment law. Now that these issues have been dealt with, we must examine all of our cases to ensure that we are correct in our assessments of their outcomes.

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The first case dealt with the issue of the equity component of income in a wrongful dismissal situation.

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Many employees receive not only a salary but also some form of equity in their company as part of their total compensation. This equity component is usually set out in a separate “plan” rather than in the employment agreement.

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The Court of Appeal clarified that, unless very specific language and terms are set out in the plan, the equity portion of the employee’s compensation must be paid if it would normally vest during the notice period, regardless of what the plan says.

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Therefore, if you are an employee you need to know what your rights are regardless of what it says in your equity plan. If you are an employer, you need to know what your potential liabilities are and how to draft plans that are legally enforceable.

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The second case that was released from the Court of Appeal clarified the law concerning the wording of termination clauses. For a number of years, there was conflicting case law at the trial level as to whether certain language in the termination clauses of employment contracts was legally enforceable.

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In general, the trial courts were bending over backwards to rule that termination clauses were unenforceable. It reached the point where it was very difficult to give assurances to employers that any termination clause would be upheld by the courts.

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The Court of Appeal has put the brakes on this trend. Without going into technical details, the Court set out that certain language can restrict common law notice periods (although never less than what is required under the Employment Standards Act).