When it comes to managing people, what you don’t know about employment law can hurt you and your company. Many employers and managers assume they understand the key legal rules, but some of the most common workplace beliefs are myths. These false assumptions and misunderstandings can lead to costly mistakes such as wrongful dismissal claims, Ministry of Labour complaints, and may lead to expensive settlements.
By correcting these misconceptions, you can make smarter, safer decisions that protect both your employees and your business. Let’s look at some of the common workplace myths and then the facts that may help you avoid costly missteps.
Myth #1: “Verbal agreements don’t matter unless they’re written down”
Verbal promises and established practices can be legally binding. In Ontario and in many other provinces, courts look at the full picture, not just the written contract. Verbal promises by an employer about hours, pay, or job status may carry legal weight.
Employers often assume only signed contracts matter. But in practice, verbal agreements, emails, and regular practices can become part of the employment deal.
For example: If a manager consistently allows work-from-home Fridays and then suddenly cancels the arrangement without notice, the employee may argue that this flexibility had become a term of their employment. Additionally, if a contract is vague or missing key terms, courts often interpret ambiguities in the employee’s favour.
Tip: Always document employment terms and workplace changes in writing. A well-documented file can prevent disputes or win them.
Myth #2: “Employees on probation have no rights”
There’s no such thing as a “no-rights” period. In Ontario, the Employment Standards Act (“ESA“) applies from day one. This includes rights to minimum wage, hours of work, rest periods, and more. After three months, employees are also entitled to minimum notice or termination pay under the ESA.
To rely on a probation period, it must be clearly stated in a written contract and the employer must meet all legal obligations during that time. Even during probation, employees are protected. They earn vacation, qualify for statutory holiday pay, and are covered by the Ontario Human Rights Code.
Firing someone in the probation period still carries legal risk. Without a properly written, ESA compliant termination clause, an employee may be owed common law notice even within the first 90 days. A common myth is that probation means you can terminate someone for any reason at the employer’s discretion. However, even in this phase, you must still act fairly, in good faith, and without discrimination.
Tip: Use clear, legally reviewed probation clauses. Train your managers to follow fair processes. Probation does not eliminate your legal responsibilities.
Myth #3: “I can just classify someone as an independent contractor”
You can’t just decide someone is a contractor. In Ontario, courts and the Ministry of Labour look at how the working relationship functions, not what the contract says.
If a worker relies on your company for income, uses your tools, follows your instructions, and doesn’t take other clients, they may legally be an employee or dependent contractor, even if the contract labels the role as “independent contractor.”
Misclassification is a common and costly mistake. Employers may be on the hook for unpaid vacation, termination pay, back wages, and CPP/EI contributions.
To determine status, authorities consider:
- Who controls how and when the work is done?
- Does the worker use their own tools?
- Can they take other clients or subcontract the work?
- Do they carry financial risk or earn profits independently?
If the answer to these is “the company” or “no,” the worker is likely not to be considered an independent contractor and should be treated as an employee.
Tip: Misclassification is easy to do and hard to fix. Always get legal advice before labelling someone a contractor.
Myth #4: “If they quit, we’re off the hook”
A resignation doesn’t always mean you’re in the clear. If an employee quits because of a toxic work environment, harassment, or major changes to their job without their consent, legally this may be considered constructive dismissal. In these cases, courts may treat the resignation as if the employee was wrongfully terminated and you could be liable for termination pay and damages.
Common triggers for constructive dismissal include:
- A significant pay cut (e.g. 25% or more)
- Demotion or major change in responsibilities
- Harassment or a hostile work environment
For example: An employee resigns after being demoted without cause or explanation. If there’s no performance documentation and the role changed significantly, the court may rule it was a forced resignation and award damages.
Tip: Always get employee consent for major changes to duties, pay, or working conditions, in writing. Investigate complaints and maintain a respectful, fair workplace. Sudden or unfair changes can carry legal consequences, even if the employee “quits.”
Myth #5: “I can fire anyone with two weeks’ notice”
Two weeks’ notice isn’t always enough. The Employment Standards Act (“ESA“) sets the minimum notice employers must give, but this is not the maximum. Unless your employment contract includes a valid, ESA compliant termination clause, courts will default to common law notice, which is often much higher.
Under common law, notice is based on factors like length of service, position, and age.
Tip: Don’t rely on ESA minimums alone. Make sure all employment contracts have clear, up-to-date, and legally enforceable termination clauses. A weak or outdated clause can lead to major liability.
Key Takeaways:
Relying on employment law myths when making decisions can lead to costly claims, fines, and compliance issues. What you’ve “always heard” may be misleading, or legally incorrect. Employment law is complex, and good intentions aren’t always enough.
Protect your business by:
- Using updated, legally reviewed employment contracts
- Training managers on ESA basics and common law rights
- Documenting job terms, changes, and expectations
- Getting legal advice before making decisions on classification, termination, or job changes
When it comes to managing people, assumptions can be expensive. Staying informed helps you make smart, fair, and legally sound decisions that support both your business and your team. You don’t have to navigate these topics alone. Bridge Legal & HR Solutions provides clear, practical legal and HR guidance tailored to your business, so you can lead with confidence. Reach out at (647) 794-5442 or email us at admin@bridgelegalhr.ca to set your team up for success the right way.
