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 at the time of termination. When an employee is fired and does not have one of these clauses, 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” termination clause was not enforceable.
The employer asked the court to enforce the without cause termination clause, 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 clause was not enforceable such that he was entitled to common law “reasonable” notice of termination.
The motion judge held that the with cause and without cause sections of the contract were independant 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 and termination clauses.
- 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 post termination. Seeking legal advice is a sound investment both prior to accepting a job and when that job comes to an end.
If you have any questions about employment contracts or termination, you can contact Nicole Simes and MacLeod Law Firm at 647-204-8107 or at [email protected].
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