Illegal Termination Provision Buried in Confidentiality Clause Voids Otherwise Valid Termination Clause

If an employment contract contains language that purports to allow the employer to terminate an employee for cause- and such language contravenes Ontario’s Employment Standards Act- does it matter where such language appears within the contract?

In Henderson v. Slavkin et al., 2022 ONSC 2964, Justice Carole J. Brown of the Ontario Superior Court of Justice rightly found that it does not matter where within the employment contract the offending language is found- if the language is illegal, then it voids the whole of the termination provision.

The Trumping of Hope. The Court of Appeal for Ontario’s Merciless Approach to Contract Interpretation in Employment Law

On September 16, 2021, I published a post titled “Hope for Ontario's Employer Bar: The ONSC's Decision in Rahman v. Cannon Design Architecture Inc.” The artwork I selected for that post was the iconic “HOPE” poster used in 2008 by the Obama campaign when the then-US Senator was running for President.

“Hope” was an appropriate word to describe the employer bar’s reaction to the Superior Court’s decision in Rahman. In that case, Justice Sean F. Dunphy of the Ontario Superior Court of Justice had held that an employee’s sophistication and the fact that she had retained independent legal advice were factors in the determination of whether a contractual termination provision ought to be enforced as written.

Justice Dunphy further held, following the approach more commonly employed in British Columbia (see my commentary in my post Employment Law Isn't Real) that, “Every contract – including this one – must be interpreted with a view to giving expression to the mutual intention of the parties as expressed in the words used by them.”

The employee in the Rahman case appealed Justice Dunphy’s decision to the Court of Appeal for Ontario.

And, just as “Hope” left Washington on January 20, 2017, hope for the employer’s bar was “trumped” when the Court of Appeal released its decision in Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 (CanLII).

Employee’s Sophistication, Representation by Legal Counsel, Not Reason to Uphold Illegal Employment Contract: ONSC

If an employment contract is negotiated as part of a larger commercial transaction, can the sophistication of the employee and the fact that he was represented by counsel during contract negotiations, be pointed to by the employer if the employee later alleges that the terms of the agreement are illegal?

In a rebuke (although not express) of Justice Dunphy’s decision in Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961, (released September 15, 2021,) Justice William Black in Steve Livshin, 2021 ONSC 6796 (CanLII), (released October 14, 2021,) held that if an employment agreement is illegal, then its unenforceable and the sophistication of the parties doesn’t matter.

Hope for Ontario's Employer Bar: The ONSC's Decision in Rahman v. Cannon Design Architecture Inc.

Are these words automatically fatal to a contractual termination provision post the Court of Appeal’s decision in Waksdale v. Swegon North America Inc.: “[The Employer] maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.”

While many in Ontario’s employment law bar (especially those predominantly acting for plaintiffs) would respond with an emphatic “of course!” In Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961, Justice Sean F. Dunphy of the Ontario Superior Court held otherwise.

Employment Law Isn't Real

“Employment law isn’t real.”

Mention to my father that to which I have dedicated my intellectual focus and professional pursuits and he will be quick to inform you that employment law is not a real thing. He will ask you, rhetorically, who has ever heard of such a thing.

My father’s perspective on the subject of employment law reminds me of something I remember being told in law school: “There is no point taking environmental law.” Perhaps somewhat unexpectedly, it was my environmental law professor who told me and my classmates such a thing. The reason, my professor teased, that there was no point in taking environmental law was because “environmental law” was not a distinct subject. It was, others would argue, simply applied criminal law, or applied tort law. So long as one had an understanding of criminal law and private rights of remedy, why would one need an entire law course dedicated to the subject of the environment? “Because,” came the obvious answer, “it’s different.”

I did not take employment law in law school. Didn’t take labour either. In fact, the closest I came to learning about the subject in law school was one lunch hour talk about mandatory retirement, which I only attended because a friend had asked me to, and there was pizza.

Had I taken such a course however, and had the professor chosen to introduce the subject in the same provocative way that my environmental law professor had, I suspect that she would have said something similar to what I heard down the hallway in my environmental law class: ‘There is no point in taking employment law.’ Employment law is, by and large, applied contract law, with occasional criminal law and tort law, but mostly applied contract law.

“Employment law” therefore is not real. It is not unique or distinct. If one knows contract law, one can wing it at employment law.

If that thesis is true, then the Court of Appeal’s decision in, Waksdale v. Swegon North America Inc., 2020 ONCA 391 (CanLII) is wrong.