Another Unenforceable Termination Clause Helps Employee Get More Termination Pay
Very recently, the Ontario Court of Appeal released another decision about employment contract termination clauses that significantly helps employees. If you are interested in previous cases see here and here.
What are Termination Clauses?
These sections of employment contracts try to limit employee rights when their job ends. When an employee is fired and does not have one of these sections in their contract, s/he might be entitled to a month of pay per year worked or even more. With a termination clause, it can be much less. Because of this, there are many legal disputes over whether termination clauses are valid.
The Waksdale case
In Waksdale v. Swegon North America Inc., Mr. Waksdale was terminated without cause after about eight (8) months of employment. Both parties agreed that the “with cause” section was not enforceable.
The employer asked the court to enforce the without cause section, which provided Mr. Waksdale with two (2) weeks termination pay.
Mr. Waksdale claimed that because the “with cause” termination clause was not legally enforceable, the entire termination section was not enforceable such that he was entitled to common law “reasonable” notice of termination.
The Decisions
The motion judge held that the with cause and without cause sections of the contract were independent and just because one was not enforceable it did not affect the other.
The Court of Appeal disagreed. The Appeal judges held that “An employment agreement must be interpreted as a whole and not on a piecemeal basis. The correct analytical approach is to determine whether the termination provisions in an employment agreement read as a whole violate the ESA. … [The courts] will not enforce termination provisions that are in whole or in part illegal.
Lessons to be learned:
- When an employee is fired, s/he may be entitled to much more than what the employer offers. This is particularly true if the employer bases their offer on the employment contract which may not be enforceable in court.
- When an employee receives a new offer of employment and is asked to sign a contract, s/he should understand that this document will attempt to take away the employee’s rights.
In both situations, an experienced employment lawyer may be able to provide advice that could significantly increase the money the employee receives when the job ends. Seeking legal advice is a sound investment both prior to accepting a job and when the relationship is finished.
If you have any questions about your contract or severance package, you can contact Barrie and Toronto Employment Lawyers MacLeod Law Firm at 647-204-8107 or at [email protected].