Hope for Ontario's Employer Bar: The ONSC's Decision in Rahman v. Cannon Design Architecture Inc.

Are these words automatically fatal to a contractual termination provision post the Court of Appeal’s decision in Waksdale v. Swegon North America Inc.: “[The Employer] maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.”

While many in Ontario’s employment law bar (especially those predominantly acting for plaintiffs) would respond with an emphatic “of course!” In Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961, Justice Sean F. Dunphy of the Ontario Superior Court held otherwise.

Dismissed Construction Employee Entitled to Reasonable Notice Despite Employment Contract and ESA

Should courts void contractual termination provisions if such provisions have even the remote potential to, at some later point in time, violate the strictures of the Employment Standards Act, 2000 even if, at the time of actual termination, there is no actual violation?

In Rutledge v. Canaan Construction Inc., 2020 ONSC 4246 (CanLII), Justice Judy A. Fowler Byrne of the Ontario Superior Court held that they should.

Employment Law Isn't Real

“Employment law isn’t real.”

Mention to my father that to which I have dedicated my intellectual focus and professional pursuits and he will be quick to inform you that employment law is not a real thing. He will ask you, rhetorically, who has ever heard of such a thing.

My father’s perspective on the subject of employment law reminds me of something I remember being told in law school: “There is no point taking environmental law.” Perhaps somewhat unexpectedly, it was my environmental law professor who told me and my classmates such a thing. The reason, my professor teased, that there was no point in taking environmental law was because “environmental law” was not a distinct subject. It was, others would argue, simply applied criminal law, or applied tort law. So long as one had an understanding of criminal law and private rights of remedy, why would one need an entire law course dedicated to the subject of the environment? “Because,” came the obvious answer, “it’s different.”

I did not take employment law in law school. Didn’t take labour either. In fact, the closest I came to learning about the subject in law school was one lunch hour talk about mandatory retirement, which I only attended because a friend had asked me to, and there was pizza.

Had I taken such a course however, and had the professor chosen to introduce the subject in the same provocative way that my environmental law professor had, I suspect that she would have said something similar to what I heard down the hallway in my environmental law class: ‘There is no point in taking employment law.’ Employment law is, by and large, applied contract law, with occasional criminal law and tort law, but mostly applied contract law.

“Employment law” therefore is not real. It is not unique or distinct. If one knows contract law, one can wing it at employment law.

If that thesis is true, then the Court of Appeal’s decision in, Waksdale v. Swegon North America Inc., 2020 ONCA 391 (CanLII) is wrong.

Quit While You're Ahead and Leave the Numbers Out of It

Quit while you’re ahead and leave the numbers out of it. Those are the fundamental lessons from the decision of the Court of Appeal for Ontario in Rossman v. Canadian Solar Inc., 2019 ONCA 992 (CanLII).

In yet another case concerning a contractual termination clause, the Court of Appeal for Ontario held that adding the words “Benefits shall cease 4 weeks from the written notice” after language guaranteeing that the employer would comply with the ESA not only violated the terms of the ESA on its face but created ambiguity as to the employer’s true intentions.

Commentary

The case is a useful primer on the fundamental principles governing contractual termination clauses. In his reasons for decision, MacPherson J.A. sets out what he calls the “leading ‘umbrella’ cases in employment law” (see paragraphs 16-24 of the court’s reasons for decision), which is worth a read for anyone new to this issue.

As I read the Court of Appeal’s decision, the reason the termination clause failed is because of the placement of the ‘ESA guarantee.’ I get the sense that, had the employer’s guarantee to provide minimum statutory entitlements followed the ‘four-week’ clause, then perhaps the court would have upheld the provision. It’s tough to say though.

The lesson that I think one can glean from this decision is that if an employer wants to put a limit on something, then they would be prudent to refrain from using actual numbers.

Keeping Babies in Bathtubs – ONSC Maintains Termination Clause Notwithstanding Contractual Issues

If an employment agreement contains one provision concerning the way by which one’s employer could terminate the agreement/employment with cause and a separate provision addressing the way by which the employer could terminate without cause, and the “for cause” provision is deemed to be illegal, then does that mean that the provision concerning “without cause” terminations is also illegal? Put another way, if the bathwater is polluted should we jettison the baby sitting in it? In Waksdale v. Swegon North America Inc., 2019 ONSC 5705, Justice Edward M. Morgan of the Ontario Superior Court of Justice (Toronto Region) held that just because one contractual provision is bad, doesn’t mean that one must overlook those provisions that are good.

Commentary

This case is helpful to employers, especially where certain, irrelevant aspects of their employment agreements are susceptible to attack. There has been a campaign, as of late, by plaintiff’s counsel to seek to find any technical non-compliance with the ESA and then argue that such non-compliance should void the entire employment agreement, even if other, relevant aspects of the contract are perfectly legal. The Waksdale case affirms the common sense principle that simply because one can find fault with one aspect of an agreement does not mean that an employee will necessarily be able to void the entire contract. Or, to go back to what I said before – just because the bathwater is dirty doesn’t mean we should lose the baby.

The ONCA's Decision in the Uber Case and the (Il)legality of Arbitration Clauses in Employment Contracts

Will an arbitration clause in independent contractor agreement always be found to be illegal, if, notwithstanding that to which the parties ostensibly agreed, the worker can later allege that he is, in fact, an “employee”?

A cursory reading of the Court of Appeal for Ontario’s decision in Heller v. Uber Technologies Inc., 2019 ONCA 1 might lead those who do not practice in the area of employment law to conclude that the answer is “yes.”

I might not be so sure.

Choice of Law Provisions: Application of the Ontario Employment Standards Act to International Employees

Can an employer and employee agree by contract that the laws of Ontario, Canada will apply to terms of their employment relationship, even if: (a) the employee works and is physically situated in in Los Angeles, California; and (b) the company is a New Jersey company with its head office in the State of Connecticut?

If the answer to that question is “yes”, do / can the employment standards set out in the Ontario Employment Standards Act, 2000 apply to such an employee?

Those were some of the questions put to the Honourable Justice James F. Diamond of the Ontario Superior Court of Justice in the case of McMichael v The New Zealand & Australian Lamb Company, 2018 ONSC 5422 (CanLII).

Court of Appeal Confirms that Silence is Golden

Silence is golden. According to that proverbial saying it is sometimes better to say nothing than to speak.

So what does this ancient saying, and 1964 The Four Seasons’ B-side, have to do with employment law? In short, in Nemeth v. Hatch Ltd., 2018 ONCA 7 (CanLII), the the Court of Appeal for Ontario essentially said as much when it comes to termination clauses.

Scissors Beat Paper; Statutes Beat Scissors: Severability Clauses Can't Fix Illegal Termination Provisions

Everyone knows that in the classic children's game, Rock, Paper, Scissors, scissors beat paper. But can scissors beat statutes?

To the point, can a trial judge use a severability clause to excise the offending portion of a termination provision, keeping the remainder of such provision enforceable? While that question might seem highly academic, it is one of critical importance to anyone employed pursuant to the terms of a written employment contract.

In North v. Metaswitch Networks Corporation, 2017 ONCA 790 (CanLII), the Court of Appeal for Ontario finally laid to rest both this issue and its earlier decision in the much-maligned case of Oudin v. Centre Francophone de Toronto, Inc., 2016 ONCA 514.

Employee "On Probation" Terminated Without Cause after Five Months of Employment Not Entitled to Any Notice: Div Court

What is the legal effect of being “on probation”? While this blog has looked at the issue of an employee being employed pursuant to a written employment contract containing a period of probation, (see Ontario Court Awards Four Months Notice to Employee Fired while “On Probation”), a recent decision from the Ontario Divisional Court provides a new wrinkle to this issue.

In Nagribianko v Select Wine Merchants Ltd., 2016 ONSC 490 the Ontario Divisional Court, sitting as the court of appeal from a decision of the Ontario Small Claims Court found that “in the absence of bad faith, an employer is entitled to dismiss a probationary employee without notice and without giving reasons.”

For the reasons argued below, I would respectfully submit that the court in this case got it wrong.