A recent decision by the Ontario Court of Appeal majorly shifts the employment law landscape relating to the enforceability of termination provisions in employment agreements.<\/p>\n
The facts of the Ontario court of appeal\u2019s case of\u00a0Waksdale v. Swegon North America<\/em>, 2020 ONCA 391, are surprisingly simple.\u00a0 The appellant employee, Benjamin Waksdale (\u201cMr. Waksdale\u201d), was employed by the respondent employer, Swegon North America Inc. (\u201cSwegon\u201d), from January 2008 until he was dismissed without cause in October 2018.\u00a0 Mr. Waksdale was paid by Swegon an amount equal to two weeks pay in lieu of notice.\u00a0 Mr. Wakdsale then sued for wrongful dismissal.<\/p>\n Mr. Waksdale\u2019s employment agreement contained two provisions related to termination.\u00a0 There was one termination provision that spoke to termination \u201cwith cause.\u201d Swegon conceded that this provision failed to comply with the\u00a0Employment Standards Act<\/em>, 2000, S.O. 2000, c. 41 (\u201cESA\u201d).\u00a0 However, Mr. Waksdale was not terminated for cause, and as such, Swegon argued that the provision that set out termination \u201cwith notice\u201d (or termination without cause) would stand, as this provision did not violate the ESA.<\/p>\n The motion judge agreed with Swegon and dismissed the motion for summary judgment and Mr. Waksdale\u2019s claim.\u00a0 The motion judge set out that the provision for termination \u201cwith notice\u201d was clear and did not violate the ESA.\u00a0 The motion judge also set out that the provision for termination \u201cwith notice\u201d was apart from the provision for termination \u201cwith cause,\u201d and could be relied upon by Swegon.<\/p>\n Now while the facts above are mundane, the Ontario Court of Appeal\u2019s decision is anything but boring.\u00a0 In fact, the decision will have massive implications to employers and employment contracts in the province of Ontario. The Ontario Court of Appeal went on to set out that, an employment agreement must be interpreted as a whole and \u201cnot a piecemeal basis.\u201d\u00a0 Therefore, it is irrelevant that a termination provision is found in one place in the employment agreement and not the other or if the termination provisions were separated or not.\u00a0 The termination provision must be read as whole.\u00a0 They disagreed that a court can interpret the \u201cwith cause\u201d termination provision separate from a \u201cwithout cause\u201d or \u201cwith notice\u201d termination provision.<\/p>\n Further, it did not matter to the Ontario Court of Appeal that Swegon did not rely on the termination \u201cfor cause\u201d provision that violated the ESA.\u00a0 The Ontario Court of Appeal confirmed an established principle that termination provisions within employment contracts must be viewed by the courts at the time in which they were drafted.\u00a0 Whether the employer ultimately relies upon a provision or not is irrelevant to the analysis.<\/p>\n It also did not matter that Mr. Waksdale\u2019s employment agreement contained a severability clause.\u00a0 The Ontario Court of Appeal held that a severability clause cannot be used to sever the termination provision that violated the ESA from the employment agreement.<\/p>\n Our Thoughts<\/strong><\/p>\n The Ontario Court of Appeal case of\u00a0Waksdave v. Swegon North America<\/em>, 2020 ONCA 391, majorly shifts the employment law landscape.\u00a0 It is now the law that an employer\u2019s \u201cfor cause\u201d termination provision can void a termination provision \u201cwithout cause\u201d contained in the same employment agreement or contract if the \u201cfor cause\u201d termination provision violates the ESA.<\/p>\n Is this a good thing?\u00a0 That depends on whether you are the employer or the employee.\u00a0 This case certainly represents yet another way in which an employee may argue that their employment contract is void and that they are owed common law notice.\u00a0 Common law notice generally benefits the employee far more than the statutory minimums contained in the ESA and this is why the employer seeks to contain the notice period to the ESA in the employment contract.<\/p>\n However, this case also represents yet another confounding problem that an employer has to deal with in respect to their employment contracts.\u00a0 Previously, the employer only had to be concerned whether the \u201cwithout cause\u201d termination provision would violate the ESA in their employment agreements.\u00a0 They thought that with a severability clause they would be able to contain any liability for common law notice to the termination provision that dealt with a \u201cwithout cause\u201d termination. Now the employer must be concerned that contractual wording in both \u201cwithout cause\u201d and \u201cwith cause\u201d terminations do not violate the ESA in order to prevent liability for common law notice even if the termination was \u201cwithout cause.\u201d<\/p>\n We would strongly urge any employer with an employment contract to review that contract with an employment lawyer in order to ensure that everything in the contract is ESA compliant as much as possible. If that provision needs to be changed, the employment lawyer should be able to effectively guide the employer on how to do that in order to prevent liability.\u00a0 It is not simply the case that the employer can shove a revised employment agreement under the nose of their existing employees and expect that the new employment agreement will hold water in the future.\u00a0 While there will be some costs associated with this review and possible amendment to their existing employment agreements, it would probably still be well less than the associated risk of paying common law notice to a terminated employee in the future.<\/p>\n","protected":false},"excerpt":{"rendered":" A recent decision by the Ontario Court of Appeal majorly shifts the employment law landscape relating to the enforceability of termination provisions in employment agreements. The facts of the Ontario court of appeal\u2019s case of\u00a0Waksdale v. Swegon North America, 2020 ONCA 391, are surprisingly simple.\u00a0 The appellant employee, Benjamin Waksdale (\u201cMr. Waksdale\u201d), was employed by […]<\/p>\n","protected":false},"author":6,"featured_media":5196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39,35],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.zeilikmanlaw.com\/wp-content\/uploads\/2022\/06\/Case-Summary.jpg","_links":{"self":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/2202"}],"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\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/comments?post=2202"}],"version-history":[{"count":3,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/2202\/revisions"}],"predecessor-version":[{"id":5255,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/2202\/revisions\/5255"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media\/5196"}],"wp:attachment":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media?parent=2202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/categories?post=2202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/tags?post=2202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe Ontario Court of Appeal completely did away with the motion judge\u2019s decision.\u00a0 They held that the motion judge erred in their interpretation of the law and that in fact both termination provisions in Mr. Waksdale\u2019s employment agreement were unenforceable.<\/p>\n