Simply Complying with the ESA not Enough to Rebut Common Law Presumption of Entitlement to Reasonable Notice – ON Divisional Court

Is the sole requirement to rebut the common law presumption of termination only upon reasonable notice that the contractual termination clause comply with the ESA, or is something else required?

In a decision released December 6, 2018, Movati Athletic (Group) Inc. v. Bergeron, 2018 ONSC 7258 (CanLII), the Ontario Divisional Court (Swinton, Thorburn, and Copeland JJ.) upheld an earlier decision of the Honourable Justice O’Bonsawin, 2018 ONSC 885, about which I blogged in my post Lack of Clear Warning Voids Termination Provision, which held something more is required.

In addition to upholding Justice O’Bonsawin’s decision, the Divisional Court provided some very clear, point-by-point analysis on what it takes for a contractual termination clause to sufficiently, and legally, rebut that common law presumption.

Court Invalidates Working Notice Period – Qualitative Component Absent

It is a well-known fact that employers must provide their employees with “reasonable notice” of the termination of their employment. But, is there a qualitative component as to what is “reasonable”, in addition to a quantitative component?

In the case of Wood v. CTS of Canada Co., 2017 ONSC 5695, the Honourable Justice John R. Sproat, ruled that there was. Later, and for reasons reported as Wood v. CTS of Canada Co., 2018 ONCA 758, the Court of Appeal for Ontario agreed that not all notice periods are created equal.

Court Says New Zealand Lamb Company’s Termination Clause Just Plain Baaa-d

Given all the other noise about what it takes to make a contractual termination clause legally binding, one can be forgiven for overlooking the most basic rule: The language used must be clear.

The contractual termination clause considered in the case of McMichael v The New Zealand & Australian Lamb Company, 2018 ONSC 5422 (CanLII), about which I recently blogged for other reasons in my post, Choice of Law Provisions: Application of the Ontario Employment Standards Act to International Employees, clearly demonstrates this most basic of rules.

Today’s Tip for Making a Termination Clause Legally Binding: KISS

Stop me if you’ve heard this one before: An employer attempts to limit, by employing a contractual termination clause, its obligation to provide notice of termination to no more than the statutory minimum amount prescribed by the provisions of the Employment Standards Act, 2000 and the employee alleges that such clause is void ab initio because it violates the strictures of such statute. In Burton v. Aronovitch McCauley Rollo LLP, 2018 ONSC 3018 (CanLII) the Ontario Superior Court of Justice once again had reason to examine such arguments.

In this case, however, the court considered all of the earlier decisions in Roden, Wood, and Nemeth.

Agreement to Provide Greater of Set Amount and ESA Minimums Legally Binding: ONCA

You know what’s fun? Trying to make sense of whether the court is going to give effect to a contractual termination clause. And, in the case of Amberber v. IBM Canada Ltd., 2018 ONCA 571, the Court of Appeal for Ontario was once again asked to do just that.

As set out by Justice Douglas K. Gray, sitting ad hoc, put it in the court’s introductory words to its reasons for decision:

The issue in this case is the enforceability of a termination clause in a written contract of employment. On a motion for summary judgment brought by the employer, Justice Hebner [Justice Pamela L. Hebner of the Superior Court of Justice] held that the termination clause was ambiguous, and did not clearly set out an intention to deprive the respondent of his entitlement to damages at common law. She held the clause to be unenforceable and dismissed the motion.

The employer, IBM, was successful on appeal.

Divisional Court Dismisses Appeal in Case Concerning Working Notice Being Inappropriate for Employees on Disability Leave

On November 24, 2017, in a post titled, Working Notice Inappropriate for Employees on Disability Leave, I blogged about the decision of the Ontario Superior Court of Justice (Hood, J.) in McLeod v. 1274458 Ontario Inc., 2017 ONSC 4073.

As the title of that post suggests, at that time, the Superior Court had found that a period of working notice did not ‘count’ with respect to an employee absent from employment on disability leave.

On March 19, 2018, a three-member bench of the Divisional Court (Swinton, Sachs and Corthorn JJ.) dismissed the employer’s appeal: McLeod v. 1274458 Ontario Inc. o/a Frontier Sales Limited, 2018 ONSC 1866 (CanLII).

Employers May Not Make Changes to Terms of Employment During Working Notice Period

In the 1997 movie “Wag the Dog” the spin doctors hired to get the President re-elected release an ad campaign with the slogan “Never change horses in mid-stream.” That idiom serves as a powerful and important reminder for employers that might seek to change the terms of an employee’s employment during a period of so-called “working notice.”

In a short decision released by the Court of Appeal for Ontario, Nufrio v. Allstate Insurance Company of Canada, 2017 ONCA 948 (CanLII), Ontario’s top court reinforced this principle.

Court of Appeal Confirms that Silence is Golden

Silence is golden. According to that proverbial saying it is sometimes better to say nothing than to speak.

So what does this ancient saying, and 1964 The Four Seasons’ B-side, have to do with employment law? In short, in Nemeth v. Hatch Ltd., 2018 ONCA 7 (CanLII), the the Court of Appeal for Ontario essentially said as much when it comes to termination clauses.

Mooch Ado About Nothing: Being Fired Before You Begin

Can you be fired from your job before you even begin it? As preposterous as that question may sound, that was the very question with which the Supreme Court of British Columbia found itself faced in the case of Buchanan v Introjunction Ltd., 2017 BCSC 1002 (CanLII).

Working Notice Inappropriate for Employees on Disability Leave

Few things in law are certain. Even fewer things in life are certain. In fact, it is said that only two things in life are certain: death and taxes. Allow me to submit that there is one more thing in life of which you can be certain: your mother is, was, and will be correct.

Among the myriad things about which your mother was correct is the fact that if you were too sick to go to school, then you were too sick to go out and play once your friends got home from school.

I raise this tautology, actually a repetition of an argument that I made in paper that I authored in 2010 titled Sick of Work? The Legal Minefield of Workplace Burnout, in respect of the case of McLeod v. 1274458 Ontario Inc., 2017 ONSC 4073, which held that working notice was inappropriate for an employee absent from work on medical leave.

Undertaking to Comply with the ESA does Not Displace Common Law Presumption of Reasonable Notice

Does an employer’s undertaking to “comply with its obligations under the employment standards legislation” displace the common law presumption of termination only upon the provision of reasonable notice?

In a decision released October 20, 2017, Nogueira v Second Cup, 2017 ONSC 6315 (CanLII), the Honourable Justice Edward M. Morgan of the Ontario Superior Court of Justice ruled that it did not.

Such decision is yet another in the long series of decisions to consider what it takes to contract out of such entitlement and, for the reasons that follow, it leaves this employment lawyer saying: ¯\_(ツ)_/¯

Judge Rules that Severance Offers Should Not be Pleaded

(c) istock/BernardaSv

If I reject a severance offer, will the judge think I am being too greedy in asking for more? That question is a common concern among employees who find themselves suddenly unemployed. Conversely, employers are often hesitant to offer enhanced severance packages, lest the employee sue for wrongful dismissal and claim the offer as evidence of the employer’s willingness to at least pay such amount.

In a decision released July 19, 2017, Ramos v Hewlett-Packard (Canada) Co., 2017 ONSC 4413, the Honourable Madam Justice Robyn M. Ryan Bell may have done a great deal to mitigate such concerns for both sides.

“Retiring Allowances” and the Taxation of Wrongful Dismissal Damages

(c) istock/MattZ90

Lawyers are often loathe to guarantee anything. However, it is said that two things in life are guaranteed: death and taxes.

This “guarantee” raises an important issue for the settlement of any wrongful dismissal case, the taxation of wrongful dismissal damages. While employers and employees can and often will agree to a favourable characterization of such damages, as the case of Ferhman v Goodlife Fitness Centres, Inc., 2017 ONSC 4348 (CanLII) demonstrates, sometimes that is not done and employees can end up receiving a lot less money – net of taxation – than they anticipated.

Wrongful Dismissal Cases are Appropriate for Resolution by way of Application: ONSC

(c) istock/Jrcasas

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] 1 SCR 631, 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 (CanLII), the Ontario Superior Court of Justice endorsed such an approach as appropriate.

Court of Appeal Finally Brings Much Needed Clarity to Issue of Benefits in Contractual Termination Provisions

(c) istock/Choreograph

It’s here. On February 23, 2017, the Court of Appeal for Ontario released its much anticipated decision in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (CanLII).

After an initial reading of the case I tweeted, “I think we have our number one case of importance to Ontario Employment Law for 2017.” To which one observer responded, “Sean, it is only February! I will remember this tweet when you write your annual "Top 5" cases.” While I stand to be corrected in ten months, I was aware of the date when I authored that tweet.

While Wood is not quite everything that I had hoped it would be, it’s still a lot of things. It could well be the most important decision to Ontario employment law this year.

Employers Can Terminate Probationary Employees Without Cause

(c) istock/Jrcasas

Can an employer terminate the employment of an employee on probation without cause? That was the fundamental question that the Ontario Divisional Court had to answer in the case of Barton v. Bowerman, unreported, Divisional Court File No. 16-DC-2178 (Ottawa.)

In an earlier post, An employer can only dismiss a probationary employee for just cause” – Why that statement may have been correct, but it doesn’t mean what you think, I wrote about what it means to be on probation and the statement in the case of Mison v. Bank of Nova Scotia, 1994 CanLII 7383 (ON SC) that, “… an employer can only dismiss a probationary employee for just cause.”

In that earlier post, I wrote the following with respect to the termination of a probationary employee:

First, it is clear, settled law that a provincially regulated employer requires neither just cause nor even reason to terminate the employment of an employee who is not on probation. Meaning that those employees who either (a) are not placed on probation, see my next point below, or (b) ‘survive’ the probationary period, most certainly can be terminated without cause or reason.

Second, the placement of an employee on probation is wholly at the discretion of the employer; there is no automatic probationary period.

Third, the act of placing an employee “on probation” cannot possibly elevate the employee’s rights; that would be antithetical to the point.

So if all of those points are legally correct, and I would submit that they are, then why is an employer required to demonstrate just cause to terminate the employment of a probationary employee at all? Sure, it’s a modified test under Mison, but still, what is the legal basis for requiring an employer to show fairness to employee to whom it has arguably provided more notice of an intention to ‘fire at will’ than one to whom it has not? It simply makes no sense to me.

I then asked for comments on the issue of probation, and Professor David Doorey of Osgoode Hall Law School wrote the following:

I'd argue that a probationary clause does not oust the right of employer to terminate with notice, without alleging that termination is for cause. But once employer asserts termination is due to unfitness or failure to meet performance standards, a probationary clause allows court to assess the employer's decision on a low threshold standard of review (did employer fairly evaluate, give employee a reasonable chance, not act in bad faith, etc). The probationary clause introduces a lower standard of cause for employers who want to avoid notice and rely on summary dismissal. Having said that, if a probationary employee is terminated while a probationary clause is still in effect, a court may presume that the termination was due to performance or unfitness and consider the employer's decision in any event. Since notice period for a probationary employee would always be very short, at least if the contract requires only ESA minimum notice, I've never understand the value to an employer of including a probationary clause. If the probationary period is less than 3 months, no notice is required under ESA, if 3-12 months, it is one week's notice. Why not just give the notice and be done with it?

What Professor Doorey did not know at the time was that his position was exactly what I intended to argue before the Divisional Court and on November 30, 2016, I did make exactly that argument.

So are we right?

Ottawa Judge Awards $50,000 in Punitive Damages after Employer Fails to Provide Statutory Minimums and ROE

Is asserting just cause for termination where it is not warranted, failing to provide an employee with his Record of Employment (ROE), and/or his statutory minimums, all in an attempt to negotiate a lower severance amount, “reprehensible” conduct warranting the imposition of punitive damages? It is according to a decision of the Honourable Justice Pierre Roger of the Ontario Superior Court of Justice sitting at Ottawa: Morison v Ergo-Industrial Seating Systems Inc., 2016 ONSC 6725.

In a wrongful dismissal case in which the court was unable to award aggravated damages for bad faith on account of a dearth of medical evidence, Justice Roger nonetheless awarded $50,000 in punitive damages for “bad faith.”

Things may have just gotten easier for plaintiffs.

Div Court Finds No Frustration of Contract after 29-Month Disability Leave; Upholds Awards of Human Rights Damages and “Punitive” Costs

(c) istock/Hailshadow

Some decisions are just textbooks on employment law. They are ‘must read’ decisions for anyone looking to practice in this area. Boucher v Black & McDonald Ltd., 2016 ONSC 7220 is a key example of how to approach the following subjects: long-term absence; frustration of contract; human rights damages; and off-set of benefits for the receipt of long-term disability benefits.

The facts of the case are easy to understand and the statement of law is first-principles stuff. For anyone wondering what to do with an employee who has been absent from employment for a considerable period of time, here is a lesson in what not to do.

“An employer can only dismiss a probationary employee for just cause” – Why that statement may have been correct, but it doesn’t mean what you think.

(c) istock/ilyast

Does an employer require “just cause” to terminate the employment of an employee “on probation”? For the reasons that will follow, I would submit that, in Ontario, provided that the employer is provincially regulated, they do not.

I agree that my position would appear to stand at odds with the following statement made by the Honourable Justice Epstein in Mison v. Bank of Nova Scotia, 1994 CanLII 7383 (ON SC):

[43] … an employer can only dismiss a probationary employee for just cause.

Stay with me, this is about to get complicated.

Being "Reckless With the Truth" Not Just Cause for Termination

Is “being reckless with the truth” as to whether a client has insurance coverage “just cause” for the termination of an insurance broker’s employment?

That was one of the questions that the Honourable Mr. Justice Ronald M. Laliberte Jr. was asked to resolve in the case of Cassell v. Irving H. Miller Limited, 2016 ONSC 5570.

Although the employer felt very strongly about having just cause for termination, Mr. Justice Laliberte saw things differently.