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Date:
2019.12.05

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THE EMPLOYERS' EDGE

Court Enforces Without Cause Termination Provision Where Employment Agreement Also Contained An Invalid Termination For Cause Provision

CCPartners has blogged on a number of court decisions that address the enforceability of termination clauses, particularly those that seek to limit an employee’s entitlements to the minimums under the Employment Standards Act, 2000 (“ESA”).   The recent Ontario Superior Court decision in Waksdale v. Swegon North America Inc., 2019 ONSC 5705 offers some relief to employers in drafting enforceable termination agreements.

In this case, an employee was dismissed without cause and sued his employer for wrongful dismissal. He claimed six months’ pay in lieu of notice for his eight months of employment with the company as the Director of Sales.

At issue before the Court was whether the Termination of Employment with Notice provision contained in the employment agreement was enforceable. The employee’s position was that the provision was unenforceable because the Termination for Cause provision in the employment agreement violated the ESA. The employer agreed that the Termination for Cause provision violated the ESA and was therefore void and unenforceable but argued that it was irrelevant given that the employee was terminated without cause.

The Court ruled in favor of the employer and dismissed the employee’s case. The Court found that the invalid Termination with Cause provision had no bearing on the enforceability of the Termination of Employment with Notice provision because the employee was terminated without cause. The Termination of Employment with Notice provision was enforceable on its own express terms and without reference to the Termination for Cause provision. In other words, only the Termination of Employment with Notice provision applied to the circumstances of the employee’s termination. 

As a result, the Termination of Employment with Notice provision did not violate the ESA and was valid and enforceable. The employee was only entitled to what the employment agreement provided upon termination (two week’s pay and the applicable car allowance) and not to common law notice.

The team at CCPartners has extensive experience drafting enforceable termination language for employers seeking to either minimize their liability at the time of dismissal or provide certainty to workplace parties where a without cause dismissal becomes necessary.  Whether it is a one page hiring letter with an ESA termination clause or a complicated executive contract dealing with bonus plans, profit sharing and other high-level compensation, CCPartners can assist in navigating employment contract drafting.   Click HERE for a list of our team members who can help you with your employment contract needs.

Click HERE to access CCPartners’ “Lawyers for Employers” podcasts on important workplace issues and developments in labour and employment law.

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