The Ontario Court of Appeal overturned a lower court judgment that upheld the termination provisions of an employment contract. In doing so, the appellate court made the following things clear:
- A termination provision that says the employer is entitled to fire someone without notice for “just cause” violates the Employment Standards Act (“ESA”) which requires notice and termination pay to be given for all terminations, including terminations for just cause. To be denied notice and termination pay, the ESA requires the employee to be “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer;”
- As has been held by the court many times, if a termination provision in an employment contract violates the ESA, then all the termination provisions in the employment contract are invalid, even those termination provisions dealing with what happens when a good and valuable employee is being fired for no cause at all: in all instances, once the ESA is contravened vis-à-vis any termination circumstance, the common law governs how the parties will separate; and
- When reviewing the termination provisions of the employment contract, the court should only look at the words, and it is an error in law to take into account extraneous factors, such as the intention of the parties, or the sophistication of the parties, or whether the parties had access to independent legal advice, or whether the parties ultimately complied with the ESA (intentionally or by happenstance): all of this is irrelevant.
The case was remitted to the lower court to, amongst other things, determine the quantification of damages for the employer’s failure to provide reasonable notice.
Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451
https://www.canlii.org/en/on/onca/doc/2022/2022onca451/2022onca451.html