An employment law blog for employers and employees.
Published by Sean Bawden of Kelly Santini LLP.
T. 613.238.6321 | sbawden@kellysantini.com | www.kellysantini.com

Saturday, 14 June 2014

Pardon my French: The Decision in Paquette c. Quadraspec Inc., 2014 ONCS 2431

The reasons for decision in the recently released case of Paquette c. Quadraspec Inc., 2014 ONCS 2431 (CanLII) are a necessary read for any Ontario employment lawyer.

In his reasons for decision, the Honourable Justice Paul Kane of the Ontario Superior Court of Justice sitting in Ottawa, challenges recent decisions from the Ontario courts on the issues of both contractual termination provisions and statutory severance.

The only catch? The decision is en français.

Facts

The Applicant had brought a motion pursuant to Rule 21 of the Rules of Civil Procedure for the court’s declaration that the termination provisions of his employment contract were null and void because they did not comply with the minimum requirements of the Employment Standards Act, 2000.

As set out in Justice Kane’s reasons for decision, the employment contract was quite detailed, spanning some 15 pages. The termination provision occupied a single page of the agreement and provided as follows:

12.4 L’Employeur peut mettre fin à l’emploi de l’employé pour tout autre motif moyennant un préavis écrit de deux (2) semaines par année complète de service, jusqu’à concurrence d’un maximum de six (6) mois.
Si l’Employeur omet de donner le préavis écrit ou s’il donne un préavis d’une durée insuffisante, il doit verser à l’employé une indemnité compensatrice équivalente au salaire de base de l’employé (excluant toute commission), pour une période égale à celle de la durée ou de la durée résiduaire de l’avis auquel l’employé avait droit. Cette indemnité, s’il y a lieu, sera versée à partir de la cessation d’emploi de semaine en semaine, jusqu’à ce que la période soit écoulée ou jusqu’à ce que l’employé ait retrouvé un emploi à son propre compte ou pour un autre Employeur, selon le premier des deux (2) évènements.
En contrepartie de ce qui est prévu à la présente disposition, l’employé renonce expressément à réclamer de l’Employeur, en cas de cessation d’emploi, quelqu’autre somme que ce soit à titre de dommages, d’indemnité tenant lieu de préavis ou à quelqu’autre titre que ce soit en raison de sa cessation d’emploi, exception faite du salaire, de l’indemnité de vacances et des autres bénéfices gagnés et non payés au moment de sa cessation d’emploi.

Loosely translated, the agreement provided:

12.4 The Employer may terminate the employee's employment for any reason upon written notice of two (2) weeks per completed year of service, up to a maximum of six (6) months.
If the Employer fails to give written notice or gives notice of an insufficient period, it must pay the employee an indemnity equal to the base salary of the employee (excluding any commission) for a period equal to the period or remaining period of notice to which the employee was entitled. The compensation, if any, will be paid from the termination of employment from week to week, until the period has elapsed or until the employee finds another job to his own account or for another employer, according to the first two (2) events.
In consideration of what is under this provision, the employee expressly waives any claim against the Employer, in the event of termination of employment, all other amounts whatsoever for damages, compensation in lieu of notice or in any other capacity whatsoever by reason of termination of employment, except for wages, vacation pay and other benefits earned and unpaid at the time of termination.

On termination, the employer provided Mr. Paquette with six months pay in lieu of notice, ostensibly in accordance with the terms of the contract.

Decision

In deciding that the impugned termination provision could not stand, Justice Kane noted the following:

[24] L’article 5 de la Loi se lit comme suit :
5. (1) Sous réserve du paragraphe (2), aucun employeur ou mandataire d’un employeur ni aucun employé ou mandataire d’un employé ne doit se soustraire contractuellement à une norme d’emploi ni y renoncer. Tout acte de ce genre est nul.
[25] Lorsqu’une clause d’un contrat de travail ne rencontre pas les exigences minimales de la Loi en violation de son article 5(1), cette clause contractuelle est nulle et sans effet...
[26] Lorsqu’une clause du contrat ne respecte pas les exigences minimales de la Loi touchant le préavis, la présomption de la common law relative au préavis raisonnable n’aura pas été détruite: Machtinger à 999-1000.
[27] La définition de “salaire” dans l’article 1(1) de la Loi oblige l’employeur a payée l’employée les commissions prévues dans le Contrat.
[28] «Salaire» s’entend de ce qui suit :
a) la rémunération en espèces payable par un employeur à un employé aux termes d’un contrat de travail, oral ou écrit, exprès ou implicite;
b) tout paiement qu’un employeur doit verser à un employé en application de la présente loi;
g) sous réserve des paragraphes 60 (3) et 62 (2), les cotisations de l’employeur à un régime d’avantages sociaux et les versements auxquels un employé a droit en vertu d’un tel régime. («wages»)
[29] La clause de cessation d’emploi limite l’indemnité compensatrice au salaire brut, à l’exception des commissions.
[30] Les articles 60(1)(c) et 61(1)(b) de la Loi, oblige Quadraspec de maintenir les avantages sociaux dont jouit l’employé prévus par les régimes d’avantages sociaux applicables à M. Paquette, jusqu’à la fin du délai de préavis…
[31] L’article 61(1) de la Loi prévoit qu’un employeur continue de verser les cotisations prévues par des régimes d’avantages sociaux jusqu’à la fin du délai de préavis. Or, la clause de cessation d’emploi exclut le paiement de tels versements et prévoit uniquement le paiement de bénéfices gagnés et non payés au moment de la cessation d’emploi.

Of critical importance to the case was the issue of the continuation of the benefits of employment, including commissions. As Justice Kane noted:

[32] Une portion pertinente de la Clause 12.4 du Contrat se lit comme suit:
En contrepartie de ce qui est prévu à la présente disposition, l’employé renonce expressément à réclamer de l’Employeur, en cas de cessation d’emploi, quelqu’autre somme que ce soit à titre de dommages, d’indemnité tenant lieu de préavis ou à quelqu’autre titre que ce soit en raison de sa cessation d’emploi, exception faite du salaire, de l’indemnité de vacances et des autres bénéfices gagnés et non payés au moment de sa cessation d’emploi.
[Emphasis added by Justice Kane.]

In argument, the employer attempted to rely upon the cases of Roden v. The Toronto Humane Society, MacDonald v. ADGA Systems International Ltd. and King v. Weber Manufacturing Technology Inc. However, as Justice Kane noted, the issue argued in the case before him had not been argued in any of those previous decisions.

Rather, Justice Kane noted, the cases of Wright v. Young and Rubicam Group of Companies (Wunderman), 2011 ONSC 4720 and Stevens v. Sifton Properties, 2012 ONSC 5508, both of which have previously been considered by this blog on exactly this point, see: Poorly Drafted Employment Agreement Proves Costly and No Termination Agreement Without Benefits, were directly on point.

In ruling against the Employer, Justice Kane noted:

[41] Quadraspec ne peut pas à la fois rédiger un contrat de travail détaillé sur quinze (15) pages en l’espèce et ensuite obtenir gain de cause dans sa demande que le tribunal infère des termes qui sont absents ou ignore la terminologie dans le libellé existant du contrat.

In English, the Employer cannot both write a fifteen page, detailed contract and then succeed in its request that the court should infer from the terms that are absent or unclear terminology in the existing wording contract.

A second issue in the case was whether the employer was obligated to pay the dismissed employee statutory severance. In an important ruling, Justice Kane held that the employer was obligated to pay severance, even though the company's payroll with respect to its operations in Ontario was lower than the statutory threshold. For more on that decision please see the post The Requirement to Pay Severance in Ontario - The Decision in Paquette c. Quadraspec Inc., 2014 ONCS 2431

Commentary

Justice Kane’s decision is an absolute monster. It advances the law in so many ways that it is worth the challenge of reading it in French.

With respect to the first issue, whether the contractual termination provision was legally binding, Justice Kane’s comments at paragraph 41 of his reasons for decision stand in stark contrast to the decision in MacDonald v. ADGA Systems International Ltd., 1999 CanLII 3044 (ON CA) in which the Honourable Justice Abella, then of the Court of Appeal for Ontario and now of the Supreme Court of Canada held that:

It would no doubt have been linguistically preferable had the termination provision in MacDonald's contract contained words after the term of notice such as "in accordance with the relevant provisions of the Employment Standards Act." But while this layer of specificity might have enhanced the clarity of the parties' intentions, its absence does not detract from the provision's legality.

The MacDonald decision is still frequently cited for the proposition that the court will read in a displacement of the common law presumption of reasonable notice even when the language could have been better. The decision in Paquette now seriously questions the merits and prudence of doing so. Whether that decision will withstand an appeal is still yet to be seen, and it is important to note that while Paquette is more recent, MacDonald is from the Court of Appeal, and was authored by a now Supreme Court justice.

On the issue of severance, Justice Kane again refused to read in words that did not exist in the legislation. On this point he again deviates from several decided cases, that will likely have to also be considered on an appeal. Both sides of the argument are compelling.

Takeaways for those with Labour Pains

The takeaway for employees from this case, is the same as with all other cases concerning contractual termination clauses, it is prudent to seek professional legal advice before making any decisions about your own case.

The professional, experienced, cost-effective and now bilingual employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

The takeaway for employers from this case is that it pays to have your employment agreement professionally drafted. While the employer in this case obviously paid a lot of attention to the details of its agreement when it came to the protection of it business interests (Justice Kane noted that the non-competition provisions spanned some five pages of the agreement), greater emphasis demonstrably should have been placed on the contractual termination provisions.

If you are an employer, and you are considering hiring staff or if you just need employment agreements for your existing employees, the professional, experienced, cost-effective, and bilingual employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.



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