{"id":1633,"date":"2020-10-21T15:28:58","date_gmt":"2020-10-21T19:28:58","guid":{"rendered":"https:\/\/www.zeilikmanlaw.com\/more-developments-in-employment-termination-clauses-in-the-wake-of-the-waksdale-decision\/"},"modified":"2021-06-25T19:34:56","modified_gmt":"2021-06-25T23:34:56","slug":"more-developments-in-employment-termination-clauses-in-the-wake-of-the-waksdale-decision","status":"publish","type":"post","link":"https:\/\/www.zeilikmanlaw.com\/more-developments-in-employment-termination-clauses-in-the-wake-of-the-waksdale-decision\/","title":{"rendered":"More Developments in Employment Termination Clauses in the Wake of the Waksdale Decision"},"content":{"rendered":"

Remember\u00a0Waksdale v. Swegon North America,<\/em>\u00a02020 ONCA 391 (\u201cWaksdale\u201d)?\u00a0 If not, do not despair because you can read all about that decision\u00a0here<\/a>.\u00a0To remind our readers, back in July 2020, the Ontario Court of Appeal released the\u00a0Waksdale<\/em>\u00a0decision and it caused a bit of a stir in the employment law community.\u00a0 So why are we bringing up\u00a0Waksdale<\/em>\u00a0in this blog?\u00a0 Well, Waksdale has just been followed by a lower court in the decision of\u00a0Sewell v. Provincial Fruit Co. Limited<\/em>, 2020 ONSC 4406.<\/p>\n

The facts of this case, like\u00a0Waksdale<\/em>, are simple.\u00a0 The plaintiff, Kevin Sewell (\u201cMr. Sewell\u201d) was employed by the defendant, Provincial Fruit Co. Limited (\u201cProvincial Fruit\u201d) in a senior sales role from October 2018 to April 2019 when he was terminated on a without cause basis.\u00a0 Provincial Fruit paid Mr. Sewell two weeks\u2019 salary and benefits pursuant to what was set out in the employment agreement.\u00a0 Mr. Sewell then sued for wrongful dismissal and brought a summary judgment motion to determine the appropriate notice period.<\/p>\n

Mr. Sewell\u2019s employment agreement contained two provisions related to termination.\u00a0 The first termination provision spoke to termination \u201cwith cause.\u201d\u00a0 This provision set out that Provincial Fruit was entitled to terminate Mr. Sewell at any time and without notice for just cause.\u00a0 The second termination provision spoke to termination \u201cwithout cause.\u201d\u00a0 This provision set out that Provincial Fruit could terminate Mr. Sewell at any time as long as Provincial Fruit provided Mr. Sewell with payment in an amount that could be a combination of notice or severance pay as \u201cmay be required by the\u00a0Employment Standards Act<\/em>, 2000 as amended from time to time.\u201d\u00a0 Mr. Sewell argued that these provisions were unenforceable and he was free to demand notice pursuant to the common law.\u00a0 Again, like the employer in Waksdale, Provincial Fruit was not relying on the \u201cwith cause\u201d provision in order to terminate Mr. Sewell.<\/p>\n

The motion judge agreed with Mr. Sewell and applied\u00a0Waksdale<\/em>\u00a0to Mr. Sewell\u2019s case.\u00a0 The judge held that the employment agreement violated the minimum standards set out in the\u00a0Employment Standards Act<\/em>, 2000, S.O. 2000, c. 41 (\u201cESA<\/em>\u201d) and was therefore unenforceable by Provincial Fruit.\u00a0The motion judge went on to set out in\u00a0Sewell<\/em>\u00a0that, as in\u00a0Waksdale<\/em>, an employment agreement must be looked at as a whole and the court should exercise discretion in favour of \u201cprotecting employees.\u201d<\/p>\n

The motion judge held that Provincial Fruit\u2019s employment agreement violated the\u00a0ESA<\/em>\u00a0for two reasons.\u00a0 The first was that the \u201cwithout cause\u201d termination provision combined notice and severance pay entitlements, which is a violation of the\u00a0ESA<\/em>.\u00a0 The second is that the \u201cwith cause\u201d termination provision was also a violation of the\u00a0ESA<\/em>\u00a0because it contracted around the ESA requirement to provide notice except in cases here the employee has engaged in \u201cwillful misconduct.\u201d\u00a0 It is here where the motion judge applied\u00a0Waksdale<\/em>.\u00a0 The motion judge set out in paragraph 19 of\u00a0Sewell<\/em>, that the \u201cwith cause\u201d termination provision was illegal and that based on the reasoning of the Court of Appeal, the agreement must be read as a whole and set aside if one or more of the terms are illegal, even \u201cif the offending term is not at issue in the instant case.\u201d<\/p>\n

Interestingly, the motion judge also specifically set out in\u00a0Sewell<\/em>, that it is \u201creasonable\u201d for an employee to sign an employment agreement without \u201cparsing out the potential meaning\u201d of a termination provision or seek independent legal advice given the \u201cpower differential\u201d between an employer and employee.<\/p>\n

Our Thoughts<\/strong><\/p>\n

We really get so see\u00a0Waksdale<\/em>\u00a0in action with\u00a0Sewell<\/em>.\u00a0 It is also a good illustration for our readers to see how common law jurisprudence works.\u00a0 It seems that the courts in Ontario are not at all backtracking from the controversy of\u00a0Waksdale<\/em>\u00a0but are continuing with the shifts in the legal landscape caused by\u00a0Waksdale<\/em>.\u00a0 As it sits now, it is the law in Ontario that an error in one termination provision will cause the entirety of the agreement to be unenforceable despite the fact that the illegal provision is not an issue with respect to the issues at hand. This also means that navigating the termination of an employee is more complicated than meets the eye and employers should consider their options carefully when doing so.<\/p>\n","protected":false},"excerpt":{"rendered":"

Remember\u00a0Waksdale v. Swegon North America,\u00a02020 ONCA 391 (\u201cWaksdale\u201d)?\u00a0 If not, do not despair because you can read all about that decision\u00a0here.\u00a0To remind our readers, back in July 2020, the Ontario Court of Appeal released the\u00a0Waksdale\u00a0decision and it caused a bit of a stir in the employment law community.\u00a0 So why are we bringing up\u00a0Waksdale\u00a0in this […]<\/p>\n","protected":false},"author":4,"featured_media":1930,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.zeilikmanlaw.com\/wp-content\/uploads\/2021\/06\/Employment_Agreement.jpg","_links":{"self":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/1633"}],"collection":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/comments?post=1633"}],"version-history":[{"count":0,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/1633\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media\/1930"}],"wp:attachment":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media?parent=1633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/categories?post=1633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/tags?post=1633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}