Apr 19, 2017

Another Termination Clause Bites the Dust

You may have signed an offer of employment or an employment contract before you started it work. If so, it could have a termination clause.

Many termination clauses attempt to limit how much termination pay an employee will receive. As we have written before, if the termination clause is poorly drafted, the judge will not enforce it and order the employer to pay more termination pay..

In a recent decision, the trial judge ordered an employer to pay an employee 15 termination months instead of the 8 weeks that was set out in the employment contract he signed.

The Case: Vinette v. Delta Printing Ltd., 2017 ONSC 182

Starting in 1999, Mr. Vinette worked for National Printers as a saddle stitcher. In 2011, National Printers went bankrupt and Delta Printing took its place. Delta Printing offered Mr. Vinette a new contract. This contract included the following termination clause:

Termination Without Cause: Delta may terminate your employment at any time on a without cause basis by providing you with written notice of termination or payment in lieu of that notice and severance pay, if applicable, mandated by the ESA.

 In the event of without cause termination Delta will continue those benefits mandated by the ESA for the period required by the ESA, and you will be responsible for the replacement of such benefits thereafter.

In 2015, Delta Printing terminated Mr. Vinette, offering him 8 weeks’ pay based on the employment contract. Mr. Vinette sued for wrongful dismissal, arguing that the termination clause was unenforceable. He also argued that he was an employee for 16 years, even though he signed a contract with Delta Printing in 2011.

The Decision

The Court agreed with Mr. Vinette, finding that the clause was unenforceable. The termination clause did not state that Mr. Vinette would continue receiving benefits during the notice period. Because benefit continuation is mandatory under the Employment Standards Act, the termination clause was found unenforceable.

The Court also found that he was employed for a total of 16 years. Even though he signed a new contract with Delta Printing in 2011, the Court found that Mr. Vinette did the same job in the same place. Further, because the employer failed to tell Mr. Vinette that they would not recognize his years of past service, Mr. Vinette’s service with the previous employer was counted as part of his new contract.

When he was fired, Mr. Vinette worked for 16 years, had a high school education, and was 58. He also held a job that was becoming scarce. Based on these factors, the Court awarded him 15 months pay in lieu of reasonable notice.

Lessons for Employees

  1. Before you sign an employment contract, think about having an employment lawyer review it so you understand the terms and conditions of your employment.
  2. Before signing a severance package, think about having, an employment lawyer review the package. The employer may be relying on a termination clause that is not legally enforceable and you may be entitled to considerably more termination pay.

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