Breach of Contract — Ontario Employment Law
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About Breach of Contract
In Ontario employment law, a 'breach of contract' occurs when either the employer or the employee fails to fulfill a key obligation outlined in their employment agreement. While many people associate this term with being fired, a breach can encompass a much wider range of issues and can be initiated by either party. The employment contract itself is a combination of written terms, verbal promises, and implied terms derived from common law and minimum standards set by legislation like the Employment Standards Act, 2000 (ESA).
For an employer, a breach could be the obvious act of terminating an employee without providing the required notice or pay in lieu, which is a wrongful dismissal. However, it can also be more subtle. For example, unilaterally demoting an employee, significantly reducing their pay, failing to pay an earned bonus or commission, or changing their work location without agreement can all constitute a breach. When an employer's action is so significant that it fundamentally alters the employment relationship, it may be considered a 'constructive dismissal,' a topic covered in more detail on its own page.
Employees can also breach their employment contracts. This commonly occurs when an employee resigns without giving the contractually required amount of notice, especially if they are in a key role. Other examples include the misuse of confidential company information, violating a non-solicitation clause after departure, or engaging in competitive activity contrary to a valid restrictive covenant. The consequences of a breach depend on its severity. A 'fundamental breach' is one that goes to the core of the contract, entitling the non-breaching party to consider the contract at an end and sue for damages. A less severe breach may only entitle them to damages for the specific loss suffered. Because the terms of each employment agreement and the facts of each situation are unique, understanding whether a specific action constitutes a breach often requires a careful legal analysis.
Frequently Asked Questions
What counts as a breach of an employment contract in Ontario?
A breach is any failure to meet a significant term of the employment agreement. This can include an employer's failure to pay you correctly, a unilateral demotion, or termination without proper notice. It can also include an employee quitting without giving required notice or violating a confidentiality clause.
My employer didn't pay my promised annual bonus. Is that a breach of contract?
It can be. If your contract or a written policy creates a clear entitlement to the bonus, the failure to pay it could be a breach of contract. The specific wording of the bonus plan is critical in determining your rights.
Can I be sued by my old employer for breaching my contract?
Yes, although it's less common, employers can sue former employees. This typically happens if an employee in a senior or critical role resigns with no notice, causing the company financial loss, or if they breach a restrictive covenant like a non-solicitation clause.
Is there a time limit to sue for breach of an employment contract in Ontario?
Yes, in most cases, you have two years from the day you discovered the breach to start a legal claim. This is a strict deadline under Ontario's Limitations Act, 2002, so it's important to act promptly.
My contract says I'm an 'independent contractor' but I'm treated like an employee. Can this be a breach?
This is a case of potential employee misclassification. While not a breach of the written contract itself, it means the employer may have breached their statutory obligations under the Employment Standards Act, 2000 by failing to provide you with employee entitlements like vacation pay, overtime, and termination pay.
When should I consult an employment lawyer about a potential contract breach?
You should consider consulting a lawyer as soon as you believe a significant term of your employment has been violated, such as your pay, job duties, or status. It's also wise to seek advice if your employer accuses you of a breach, as the consequences can be serious.
Common Scenarios
- An employer promises a specific health and dental benefits package in an offer letter but then provides a much less comprehensive plan after the employee starts.
- A senior marketing manager signs a contract with a non-solicitation clause, but upon resigning, immediately contacts and secures her top three former clients for her new competing firm.
- A company is acquired, and the new owner changes the commission structure for the sales team, resulting in a 30% average reduction in their total compensation.
- An employee is hired for a remote-first position based in Toronto, but six months later, the employer mandates a full-time return to their office in Barrie.
- A skilled tradesperson quits their job without giving the four weeks' notice required in their contract, forcing the employer to delay a critical project and hire a temporary replacement at a premium.
What You Should Know
Featured Cases
Ngan v. The Bank of Nova Scotia
2025 ONSC 2354 (CanLII) · 2025-04-16Class Action Employment Case: Bank of Nova Scotia - Certification and Vacations
A class action case involving the Bank of Nova Scotia where the court certified a class of employees who received incentive awards or RSUs, addressing whether these constitute 'wages' under the Canada Labour Code. The court also granted partial discontinuance of claims related to unused and expired vacation days and approved amendments to the claim to reflect individualized issues.
Davis v. Amazon Canada Fulfillment Services, ULC
2023 ONSC 3665 (CanLII) · 2023-06-19Class Action Employment Case: Arbitration Agreements and Misclassification
A class action case involving Delivery Partners (DPs) and Driver Associates (DAs) against Amazon Canada Fulfillment Services, ULC. The court enforced arbitration agreements for DAs, denied certification for DAs and DPs due to failure in meeting class action criteria, and ruled on the common employer status and misclassification of employees under employment law.
Griffon Integrated Security Technologies et al. v. Valley Associates Inc. et al.
2023 ONSC 2200 (CanLII) · 2023-04-14Wrongful Dismissal: Cancer Patient Entitled to 20 Months' Notice
A wrongful dismissal case where an employee terminated without cause while undergoing cancer treatment was awarded 20 months' notice and $290,932.40 in damages for pay in lieu of notice. The employer's conduct, including unfounded allegations of dishonesty, was considered in determining the notice period.
Montaque v. Handa Travel Student Trip Ltd.
2020 ONSC 6459 (CanLII) · 2020-10-23Class Action Employment Misclassification: Trip Leaders Entitled to Wages and Benefits
A class action case where Trip Leaders, previously classified as volunteers, were granted certification to pursue claims for wages and benefits under the Employment Standards Act, 2000. The court also addressed the breach of contract and unjust enrichment claims related to the misclassification.
Imola v. Dundee Securities Ltd.
2019 ONSC 1715 (CanLII) · 2019-03-15Employment Disputes: Leave to Amend Claim for Misrepresentation and Breach of Contract
A civil procedure case where the plaintiff sought leave to amend the Statement of Claim to add a new defendant and assert additional claims related to misrepresentations by the employer and supervisor, as well as inducement of breach of contract. The court must decide whether to grant leave to amend based on the Rules of Civil Procedure and relevant legal tests.
Johnston v. The Corporation of the Municipality of Arran-Elderslie
2018 ONSC 7616 (CanLII) · 2018-12-19Wrongful Dismissal: Chief Building Official Awarded Damages
A wrongful dismissal case where a Chief Building Official was terminated without notice by the Municipality of Arran-Elderslie. The court found the termination wrongful due to the employer's failure to provide just cause, estoppel, and breach of contract. Aggravated and punitive damages were awarded for the manner of dismissal and mental distress.
Ball v 189557 Ont. Inc.
2016 ONSC 3224 (CanLII) · 2016-05-16Breach of Settlement Agreement: Damages Awarded for Unpaid Salary Installments
A case involving the termination of employment through a settlement agreement where the defendant failed to make six salary installments, leading to a breach of contract claim. The court found no fundamental breach but awarded damages for the unpaid balance of $25,000 USD and pre- and post-judgment interest, along with costs.
Roberts v ZoomerMedia Limited
2016 ONSC 1567 (CanLII) · 2016-03-04Employment Agreement Breach: Severance and Sabbatical Payments Awarded
A termination of employment case where the plaintiff was entitled to severance and sabbatical payments under a written Employment Agreement. The court ruled that the defendant breached the agreement and did not require the plaintiff to mitigate damages. Summary judgment was granted based on the application of Rule 20 of the Rules of Civil Procedure.
Bakshi v Global Credit
2015 ONSC 6842 (CanLII) · 2015-11-13Class Action Employment: Unpaid Commissions and Breach of Contract
A class action was certified for unpaid commissions following layoffs, addressing claims of breach of contract and unjust enrichment. The court granted certification of common issues, including aggregate damages and punitive damages, and fixed costs at $25,000.
Diamantopoulos v. KPMG LLP
2014 ONSC 1038 (CanLII) · 2014-06-02Senior Staff Accountant's Termination: 10 Months' Notice Awarded
A senior staff accountant was terminated after 10 years of service and was awarded 10 months' notice or salary in lieu thereof. The court also addressed the employer's response to harassment allegations and found no breach of contract or intentional infliction of mental distress.
Pasian v. Academic Clinicians’ Management Services
2013 ONSC 7787 (CanLII) · 2013-12-17Employment Contract Breach and Summary Judgment in Class Action
A class action case regarding the employment relationship between Academic Clinicians’ Management Services (ACMS) and Fellows at Sunnybrook Hospital. The court ruled that ACMS was an employer under the common employer doctrine. The court also dismissed claims of breach of contract and granted summary judgment in favor of the defendant.
Rosen v. BMO Nesbitt Burns Inc.
2013 ONSC 2144 (CanLII) · 2013-08-20Class Action Employment Case: Unpaid Overtime for Investment Advisors
A class action case involving investment advisors who claimed unpaid overtime under the Employment Standards Act, 2000. The court certified the class action and determined common issues related to the application of exemptions and breach of contract.
Rutherford v. RBC Dominion Securities Inc.
2011 ONSC 6002 (CanLII) · 2011-10-12Wrongful Dismissal: Client Relationships and Succession Program Dispute
A summary judgment motion was dismissed in a wrongful dismissal case where the plaintiff alleged breach of contract and fiduciary duties. The court ruled that genuine issues requiring trial exist regarding the employer’s adherence to a succession program and proprietary interests in client relationships.
Sandid v. Komtech
2010 ONSC 4779 (CanLII) · 2010-10-12Consultant Wrongfully Terminated: Breach of Commission Agreement
A breach of contract case involving a consulting services agreement where the court determined that the defendant wrongfully terminated the plaintiff and breached the agreement by failing to pay commissions. The court also considered the admissibility of evidence and the calculation of commissions.
Oberoi v. Newtek Automotive Distribution Inc.
2010 ONSC 4093 (CanLII) · 2010-07-23Wrongful Termination Case: Employment Contract Breach and Damages Sought
A wrongful termination case where the plaintiff's employment was terminated without cause. The court will assess damages for salary, benefits, and notice period, applying employment law principles to determine the breach of the employment contract.
Timothy William Campbell v. BMO Nesbitt Burns Inc.
2010 ONSC 2315 (CanLII) · 2010-05-03Investment Advisor Breach of Non-Solicitation and Confidentiality Clauses
An employment contract dispute involving an investment advisor who resigned and allegedly breached non-solicitation and confidentiality clauses by using confidential client information and soliciting clients. The court assessed whether an interlocutory injunction should be granted and whether the defendant breached contractual obligations under the employment agreement.
Intracorp v. Morgan
2010 ONSC 386 (CanLII) · 2010-01-21Fiduciary Duty Breach: Senior Employee Misappropriates Confidential Info
A case involving a senior employee who breached fiduciary duties by misappropriating confidential information and profiting from personal business ventures during employment. The court considered whether the employee must account for gains, return misappropriated information, and potentially return severance payments.
Khamis v. Statel Capital Technology Partners Inc.
2010 ONSC 217 (CanLII) · 2010-01-12Termination Case: Breach of Contract and Notice Requirements
A termination case involving a breach of contract and issues related to notice requirements under Rule 13.1.02(2).
Islip v. SSI Equipment Inc.
2009 CanLII 32704 (ON SC) · 2009-06-19Employment Contract Dispute: Bonuses and Breach of Non-Competition Clauses
An employment contract dispute involving the Islip family and SSI Equipment Inc., where the court examined breaches of non-disclosure and non-competition clauses, entitlement to bonuses, and the application of contractual remedies. The court found that the Islip family was entitled to bonuses despite breaches of contract and denied punitive damages.
Caponi v. Canada Life Assurance Company
2009 CanLII 592 (ON SC) · 2009-01-13Class Action: Pension Plan Wind-Up Breach of Employment Obligations
A class action certification motion regarding the partial wind-up of a supplemental pension plan, alleging breaches of employment obligations and contractual duties. The court granted certification, finding the proceeding advanced access to justice and judicial economy, and allowed claims of breach of contract and fiduciary duties to proceed.