Illegal Termination Provision Buried in Confidentiality Clause Voids Otherwise Valid Termination Clause

If an employment contract contains language that purports to allow the employer to terminate an employee for cause- and such language contravenes Ontario’s Employment Standards Act- does it matter where such language appears within the contract?

In Henderson v. Slavkin et al., 2022 ONSC 2964, Justice Carole J. Brown of the Ontario Superior Court of Justice rightly found that it does not matter where within the employment contract the offending language is found- if the language is illegal, then it voids the whole of the termination provision.

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.

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.

Time Spent as Independent Contractor Relevant Factor in Calculating Reasonable Notice

Is the amount of time spent as an “independent contractor” an appropriate fact for the court to consider when calculating the reasonable notice period if the worker later becomes either a true employee or dependant contractor?

In Cormier v. 1772887 Ontario Limited c.o.b. as St. Joseph Communications, 2019 ONSC 587 (CanLII), affirmed by the Court of Appeal for Ontario in Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965 (CanLII), Justice Paul Perell held that, it would be wrong in principle to ignore those years of the relationship in determining the reasonable notice period.

The case is an important read for those who may elect to start their relationship one way, but then change it over time.

"Failsafe" Language Fails to Save Termination Provision

If a contractual termination clause provides for “the greater of” ESA entitlements and a set amount, will the guarantee of “the greater of” act as a failsafe if the rest of the provision is contrary to the provisions of the ESA?

In Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679 (CanLII) , the Court of Appeal for Ontario said “no.”

Simply Complying with the ESA not Enough to Rebut Common Law Presumption of Entitlement to Reasonable Notice – ON Divisional Court

Is the sole requirement to rebut the common law presumption of termination only upon reasonable notice that the contractual termination clause comply with the ESA, or is something else required?

In a decision released December 6, 2018, Movati Athletic (Group) Inc. v. Bergeron, 2018 ONSC 7258 (CanLII), the Ontario Divisional Court (Swinton, Thorburn, and Copeland JJ.) upheld an earlier decision of the Honourable Justice O’Bonsawin, 2018 ONSC 885, about which I blogged in my post Lack of Clear Warning Voids Termination Provision, which held something more is required.

In addition to upholding Justice O’Bonsawin’s decision, the Divisional Court provided some very clear, point-by-point analysis on what it takes for a contractual termination clause to sufficiently, and legally, rebut that common law presumption.

Top Five Cases of Importance to Ontario Employment Law - 2018 Edition

2018 has been, compared to some other years, relatively quiet with respect to employment law jurisprudence. Sometimes that can be a good thing.

The point of this blog post, however, is to consider what I consider to be the “Top Five Cases of Importance to Ontario Employment Law”. I have produced such a list since 2012:

• 2012
• 2013
• 2014
• 2015
• 2016
• 2017

And so, with another year coming to a close, it is once again time for this Ontario employment lawyer to provide his picks for the Top Five Cases of Importance to Ontario Employment Law!

Court Says New Zealand Lamb Company’s Termination Clause Just Plain Baaa-d

Given all the other noise about what it takes to make a contractual termination clause legally binding, one can be forgiven for overlooking the most basic rule: The language used must be clear.

The contractual termination clause considered in the case of McMichael v The New Zealand & Australian Lamb Company, 2018 ONSC 5422 (CanLII), about which I recently blogged for other reasons in my post, Choice of Law Provisions: Application of the Ontario Employment Standards Act to International Employees, clearly demonstrates this most basic of rules.

Today’s Tip for Making a Termination Clause Legally Binding: KISS

Stop me if you’ve heard this one before: An employer attempts to limit, by employing a contractual termination clause, its obligation to provide notice of termination to no more than the statutory minimum amount prescribed by the provisions of the Employment Standards Act, 2000 and the employee alleges that such clause is void ab initio because it violates the strictures of such statute. In Burton v. Aronovitch McCauley Rollo LLP, 2018 ONSC 3018 (CanLII) the Ontario Superior Court of Justice once again had reason to examine such arguments.

In this case, however, the court considered all of the earlier decisions in Roden, Wood, and Nemeth.

Lack of Clear Warning Voids Termination Provision

Must an employer provide its employees with a clear warning that it intends to provide no more than the minimum amount of notice prescribed by the Employment Standards Act, 2000 in order to create a legally binding employment contract?

Does the failure to provide a clear warning to an employee that her employment may be terminated upon the provision of no more than the minimum amount of notice prescribed by the Employment Standards Act, 2000 create an ambiguity voiding the contractual termination provision?

In a decision of the Ontario Superior Court of Justice sitting at Ottawa, released February 6, 2018, Bergeron v. Movati Athletic (Group) Inc., 2018 ONSC 885, the Honourable Justice Michelle O’Bonsawin said that the answer to those questions is “yes.”

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.

Court of Appeal Finally Brings Much Needed Clarity to Issue of Benefits in Contractual Termination Provisions

(c) istock/Choreograph

It’s here. On February 23, 2017, the Court of Appeal for Ontario released its much anticipated decision in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (CanLII).

After an initial reading of the case I tweeted, “I think we have our number one case of importance to Ontario Employment Law for 2017.” To which one observer responded, “Sean, it is only February! I will remember this tweet when you write your annual "Top 5" cases.” While I stand to be corrected in ten months, I was aware of the date when I authored that tweet.

While Wood is not quite everything that I had hoped it would be, it’s still a lot of things. It could well be the most important decision to Ontario employment law this year.

Will Wood Finally Answer the Question of Benefits? There’s Hope.

This post will break from tradition. Rather than be a post about something that has happened, it will be an anticipatory post about something that is expected to happen.

On September 6, 2016, the Court of Appeal for Ontario heard the appeal of the decision reached by Mr. Justice Grant Dow of the Ontario Superior Court of Justice in Wood v Fred Deeley Imports Ltd., 2016 ONSC 1412 (CanLII). Should the court choose to answer all of the questions put to it by the appellant, then I have no doubt that the decision will fundamentally alter the landscape of Ontario employment law.

UPDATE: On February 23, 2017, the Court of Appeal for Ontario released its much anticipated decision in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (CanLII). For analysis of that decision, see my post: Court of Appeal Finally Brings Much Needed Clarity to Issue of Benefits in Contractual Termination Provisions.