On July 6, 2022, the applicant commenced employment with her employer pursuant to the terms of a one-year fixed-term contract agreement. Sometime before the end of that one-year term, the employer terminated the contract.
On March 27, 2023, the employee caused the Ontario Superior Court of Justice sitting at Hamilton to issue an Application against the employer for damages equal to the balance of the contract.
The employee’s application was heard less than three months later and on June 21, before the contract was even set to expire, she had her decision.
For those critical of the pace at which some litigation can move, the claim stands as proof that with proper advocacy things can get done.
Facts
The decision is not yet on CanLII. It is unclear whether it will ever find its way there, but for those who may be interested in having it, please feel free to reach out to me.
Because I was not directly involved in the matter, I don’t have all of the facts. I don’t know when the employment relationship was was ended, I don’t know why, and I don’t know all of what was argued.
What I do know is that the case proceeded by way of Application, something I have advocated doing for several years. See my post from almost six years ago, Wrongful Dismissal Cases are Appropriate for Resolution by way of Application: ONSC.
According to the court’s decision, two discrete issues were presented for the court’s determination:
- Does a fixed term of a contract of employment constitute a termination clause?
- If other terms of the contract contain termination clauses that are void as being noncompliant with the Employment Standards Act, 2000, S.O. 2000, c.41 (ESA), does that render the one-year term contract void?
Decision of the Ontario Superior Court
In a concise decision delivered the day after the hearing of the Application, Justice R. John Harper provided the following reasons for the court’s decision:
[6] In this case, [Applicant] argues that since the termination clauses are void, [Applicant] is entitled to wages she would have received to the end of her term pursuant to [Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256]. In the case before me, the contract of employment did provide for early termination. The contract contains a clause that deals with “Termination for Cause” and a further clause that provides for “Termination on Notice.” The termination clauses purportedly limited [Applicant]’s entitlement to pay upon termination. However, as alluded to earlier, counsel concede that those provisions in this contract are void as being contrary to the ESA and its associated regulations.
[7] [Applicant]’s employment contract had a start date of July 6, 2022. It was for a one-year term. Her base salary was $150,000.00 per annum plus company benefits.
[8] [Employer] submits that in a later decision, the Ontario Court of Appeal also dealt with the issue of termination clauses in Waksdale v. Swegon North America Inc., 2020 ONCA 391.
…
[10] Is a term in an employment contract that fixes the term of the contract a termination clause? If so, does that clause fall along with the other illegal termination clauses?
[11] I find that a clause that fixes a term of the contract clearly and unambiguously to a defined term limit cannot be considered in the same light as a term in an employment contract that provides for early termination.
[12] I am guided in this conclusion by the Court of Appeal in Howard, at para. 20:
… Where an employment agreement states unambiguously that the employment is for a fixed term, the employment relationship automatically terminates at the end of the term without any obligation on the employer to provide notice or payment in lieu of notice.[13] The mischief in termination clauses that is to be guarded against deal with cases where early termination clauses attempt to limit payment upon early termination that an employee is otherwise entitled to by statute or operation of the common law.
…
[15] There is nothing illegal in setting out the term limit of an employment contract. Fixed term contracts do not offend any provision of the ESA, nor do they restrict any common law rights of an employee. There is not mischief to be protected against in such circumstances.
[16] In my view, if the separate and distinct termination clauses are void, that does not void the whole contract and that includes the time limitation set out in a fixed contract.
As a result, Justice Harper found that the employee was entitled to the wages and benefits she would have otherwise been entitled to until the end of the term.
Commentary
With respect to the legal decision made by Justice Harper, one is inclined to agree. The case is reminiscent of the decision in Roberts v Zoomermedia Limited, 2016 ONSC 1567, aff’d 2017 ONCA 327.
In Roberts, the term of the agreement was considerable longer, such that the damages award was considerably higher. The employer, attempting to avoid such damages award tried arguing that the contract was void. Justice Miller of the Court of Appeal, in dismissing such argument held, “Effectively, the appellant argues that because it did not agree to provide the respondent with all of his statutory entitlements – entitlements that were conditional on an early termination, an event which never occurred – the respondent must therefore forfeit his contractual entitlements: contractual entitlements that are far greater than what either the ESA or the common law would have provided. This would be a perverse application of a statute that is intended to protect the interests of employees, and I would reject it.”
With respect to the method of hearing, I cannot help but reflect on what I wrote back in 2017:
A frequent criticism of the Canadian judicial system is that it moves too slowly. Indeed, as the Supreme Court of Canada recently observed in its now infamous decision in R. v. Jordan, 2016 SCC 27 there has been a “culture of complacency towards delays” in the justice system for years. And while the Supreme Court’s comments were directed towards the criminal system in that case, most would tend to agree that things are no better in the civil bar.
And so what is one to do when he finds himself with a simple, straight-forward wrongful dismissal case, where the only points in issue are: (1) Is this employment contract dispositive of my entitlements to reasonable notice, and (2) If the answer to that question is no, then what is the notice period?
Prevailing wisdom over the past seven or so years has been that the dismissed party should start an action, and then bring a motion for summary judgment. (See the comments of Justice Hackland in Beatty v. Best Theratronics Ltd., 2014 ONSC 3376 (CanLII): I agree with Perell J.’s observation in Adjemian v. Brook Crompton North America, [2008] O.J. No. 2238 (Ont. S.C.J.) that summary judgment may be an appropriate and optimal way to proceed in cases involving the determination of reasonable notice periods.)
But, as will be considered below, motions for summary judgment, especially in cases where the amount claimed is less than $100,000, can have their drawbacks and limitations.
Is there a better way yet still?
I believe there is. And, in the case of Farah v EODC Inc., 2017 ONSC 3948, the Ontario Superior Court of Justice endorsed such an approach as appropriate.
Very recently another, prominent employment lawyer (whom I believe subscribes to this blog) wrote to me, in respect of proceeding by Application, describing same as, “rushing to lose”. In addition to my own disagreement with such characterization, as this case demonstrates, proceeding by way of Application is not always a “rush to lose.”
I maintain my position from 2017: Applications are an appropriate, efficient, pragmatic way to resolve simple wrongful dismissal disputes where the real matter in issue is whether the contract is dispositive of entitlements. If that’s what the case is really about, then I see no reason why one would proceed any other way.
Contact Me
Sean Bawden is Experience. At Work.
I am an experienced employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, which is based in Ottawa. I have appeared in courtrooms all across Ontario from Stratford, to L’Orignal, to Thunder Bay.
For 2.5 years I was in-house legal counsel providing employment law advice to one of Canada’s largest corporations and appeared in labour courts and tribunals literally the world over.
I am also been a part-time professor at Algonquin College teaching Employment Law. I have previously also taught Trial Advocacy for Paralegals and Small Claims Court Practice.
I can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321 x233.
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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.
Makes good sense , both the case reasoning and the speedy approach that resulted in the decision.
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